Skip to content

Illinois grabs fed tax refunds against unemployment fraud

Illinois so far this year confiscated $26.3 million in federal tax refunds from individuals who knowingly collected unemployment insurance while working, the Illinois Department of Employment Security said today.

The three-year-old program has recovered $120.57 million through tax garnishments and convincing individuals to enter into repayment plans to pay off their debt.

Individuals who owe IDES money because of fraud will not receive future benefits until that debt is paid.

“Illinois workers are honest and proud. Those who steal money from the fund used to help our neighbors who are out of work must be held accountable,” IDES Director Jay Rowell said. “We are not talking about innocent people who made a one-time mistake. They knew they were lying, refused to consider a repayment plan when they were caught, and made enough money at work to earn a tax refund.”

In the past three years, IDES confiscated federal tax refunds 58,376 times. If a refund is not enough to repay the debt, and the individual continues to refuse a repayment plan, IDES will garnish future refunds until the debt is paid. Data shows that this process is changing behavior. In 2012, the first year of the federal tax garnishment, 922 people entered into repayment plans. This year, 3,495 have agreed to a repayment plan.

Protecting the integrity of the Trust Fund is paramount. Money that pays for unemployment insurance benefits comes from a business payroll tax. The Trust Fund’s balance is among the factors considered when determining the payroll tax amount. The lower the Fund balance, the higher the payroll tax. Bi-partisan reforms enacted in 2011 enabled IDES to use this garnishment tool.

IDES integrity programs are catching waste, fraud and abuse more quickly than ever before. In many cases, the fraud is identified before a single benefit payment can be made. When that does not occur, Illinois garnishes tax refunds. It also will confiscate lottery winnings from individuals who wrongfully collected unemployment.

Employers play a critical role in fighting unemployment fraud. IDES contacts employers when an unemployment application is received so the employer can accept or challenge the claim.

Leave a Comment