The state is threatening to go after the tax refunds of those who received unemployment benefits who shouldn’t have. The state now has the authority to garnish tax refunds of those who continued to claim benefits even though they were working, and it used that power to recover $42 million from 20,000 people earlier this year.
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The announcement Tuesday that the state has found another 12,000 people who fraudulently claimed $46 million, and is going after them, is Phase 2, with the hope that some of these people will be filing late or amended tax returns (due Oct. 15) and the state can garnish the refunds. These individuals have been notified that their refunds will be garnished if they don’t pay or agree to a payment plan.
“There are a lot of people who we called when we notified them of this who were very surprised that we’re now aggressively pursuing this, and I do think that the publicity surrounding this definitely helps to let people know there are consequences to unemployment insurance fraud,” said Jay Rowell, director of the Illinois Department of Employment Security, hopes this discourages fraud in the future.
This is the first year the department has had the authority to garnish federal tax returns. It has been able to garnish state tax returns since 2007. Unemployment benefits are paid out of the Unemployment Insurance Trust Fund, which is funded by contributions by businesses based on their history of laying off workers. The recovered money makes that fund stronger, and lessens the need for taxes on businesses, Rowell said.