Sneak Preview: Treasury Addresses Improper Payments in ERA FAQ

(The following was excerpted from a recent Thompson Grants Compliance Expert article.) The Department of the Treasury recently updated its Frequently Asked Questions (FAQ) pertaining to the Emergency Rental Assistance (ERA) programs to provide guidance on measures recipients should take in response to findings of improper payments with program funding.

Congress established two separate ERA programs in response to the COVID-19 pandemic. The ERA1 program, which was authorized by the Consolidated Appropriations Act of 2021 (Pub. L. 116-260) provided $25 billion to assist eligible households with financial assistance and housing stability services. The American Rescue Plan Act of 2021 (Pub. L. 117-2) authorized the ERA2 program, which provided $21.55 billion to assist eligible households with financial assistance, provide housing stability services, and as applicable, to cover the costs for other affordable rental housing and eviction prevention activities.

ERA1 funds were available through Sept. 30, 2022, while the period of performance for ERA2 funds ends on Sept. 30, 2025. Recipients may not incur any obligations to be paid with ERA2 funding after this date.

Treasury initially issued the FAQ in January 2021 to provide guidance in following the agency’s requirements under the programs. The FAQ, as of Dec. 4, now includes four new questions related to improper payments, stressing that recipients “are responsible for using ERA funds only for allowable purposes” and that “improper payments are not permissible under the ERA programs.”

The document explains that in cases where an ERA recipient made improper payments resulting from fraud or deliberate misrepresentations, it (1) should take appropriate steps to recover these funds paid inappropriately; (2) must timely report to Treasury on all violations of federal criminal law involving fraud, bribery or gratuity violations potentially affecting their awards (§200.113); and (3) must submit individual cases of fraud, waste or abuse related to their awards to Treasury’s Office of Inspector General and to the agency’s Office of Capital Access.

In response to a question asking whether grantees have additional flexibilities in cases where improper payments were not the result of fraud or deliberate misrepresentations, Treasury notes that it recognizes the unique emergency circumstances in which the ERA programs were implemented and that attempts to recoup nonfraudulent improper payments from ERA beneficiaries could undermine the purpose of the ERA program.

(The full version of this story has now been made available to all for a limited time here.)

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