Almost everyone knows that the economy – across the world as well as within the United States – has been troubled for the last several years. As a result, many hardworking individuals have been forced to rely on unemployment benefits to help cover their basic living expenses while they try to reenter the job market. While such benefits are meant to help individuals who have lost their jobs through no fault of their own, there are always unscrupulous people who try to game the system for their own benefit. In response to these concerns regarding unemployment benefits fraud, the Oregon Senate recently passed a bill allowing the state of Oregon a new way of recovering money from people who have fraudulently collected unemployment benefits.
Oregon Lawmakers Allow Tax Refund Interception to Redress Fraud
Unemployment benefits are paid out to individuals who are out of work through no fault of their own through an unemployment insurance trust fund, funded by Oregon employers. Fraud in this system usually occurs when a person collects unemployment benefits while nevertheless being employed. When the state’s Employment Department detects fraud, it makes efforts to recollect the benefits that were improperly paid out. However, sometimes the Employment Department’s efforts at recollection fail.
The Albany Tribune reported in mid-April that, in an effort to help with the state recoup losses from fraudulent unemployment claims, the Oregon Senate passed Senate Bill 259, which allows the Employment Department to intercept some or all of the federal income tax refund of an individual who has improperly collected unemployment benefits. Oregon already has the right to intercept the state tax refund of an individual who has committed unemployment benefits fraud and cannot or will not repay the money; Senate Bill 259 expands this right to cover the individual’s federal tax refund as well.
We should note that intercepting state and federal tax refunds – despite Oregon’s ability to do so – is not the state’s first plan of attack when trying to recoup fraudulently collected benefits. In general, the state will only do so if other collection efforts fail. However, the numbers of people whose tax refunds may be affected by the bill are still quite high; after the bill was passed, the Employment Department mailed notices to 14,000 Oregonians that it believes have committed $55 million worth of unemployment fraud. If those 14,000 people cannot make their payments, or prove that they do not owe the money, within 60 days, the United States Department of the Treasury will collect the debt by taking the money out of tax refunds.
This bill provides Oregon with a strong and welcome new tool for recollecting fraudulently claimed benefits, which will help ensure that the unemployment insurance trust fund remains healthy and that unemployment benefits remain available to those who need them. It remains to be seen, however, how the Employment Department will actually use its new powers and what complications the new measure may bring. For example, the bill may cause a significant hardship for Oregonians who are falsely accused of committing unemployment fraud and have a difficult time proving their innocence.
If you have questions about whether you qualify for unemployment benefits, please contact one of our attorneys; we can help you evaluate your termination and guide you through the benefits process.