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February 13, 2013

IDES Recovers $44 Million from Unemployment Cheats
Improper Payments Weaken Trust Fund, Illinois Economy; Some Individuals Could Face Prosecution

CHICAGO – In 2012, more than $44 million was recovered from 20,000 people who wrongfully collected unemployment insurance, the Illinois Department of Employment Security (IDES) said today. Federal tax returns were confiscated from those who refused IDES’ offer of a repayment plan.

So far this year, IDES has asked the Internal Revenue Service to seize an additional $226 million from 71,000 people who either purposefully defrauded the IDES or should have known they were not entitled to the temporary benefits.

“Not only are we criminally prosecuting benefit fraud, this shows we are fighting to claw back the money,” IDES Director Jay Rowell said. “Every dollar we get back means businesses will pay less in taxes so they can use that money to hire more employees and help grow our economy.”
This is the second year that IDES can garnish federal tax returns following reforms enacted in 2011. The initiatives to fight fraud, increase tax fairness and reduce costs for businesses are part of Gov. Pat Quinn’s plan to improve the state’s climate for job creation and strengthen the Illinois economy.

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.

In the 18 months since the Governor’s appointment of Rowell and his overwhelming bi-partisan Senate confirmation, anti-fraud and Trust Fund integrity initiatives include garnishing federal tax returns of unemployment cheats; checking unemployment rolls against prison logs; strengthening the anti-fraud unit with attorneys from Attorney General Lisa Madigan; creating a new-hire directory to more quickly identify fraud; and holding business leaders personally liable for misstating their company’s obligations. The programs have saved taxpayers more than $120 million.

Unemployment insurance’s temporary dollars most often pay for essentials at the neighborhood grocery, gas station and clothing store, thereby supporting the local economy. Every $1 in unemployment insurance benefits generates about $1.63 in economic activity.


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