IDES recovers $44 million from unemployment cheats

[February 16, 2013]  CHICAGO -- In 2012, more than $44 million was recovered from 20,000 people who wrongfully collected unemployment insurance, the Illinois Department of Employment Security said this week. 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," said IDES Director Jay Rowell. "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 bipartisan Senate confirmation, anti-fraud and trust fund integrity initiatives by the department have garnished federal tax returns of unemployment cheats; checked unemployment rolls against prison logs; strengthened the anti-fraud unit with attorneys from the office of Attorney General Lisa Madigan; created a new-hire directory to more quickly identify fraud; and held 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.

[Text from Illinois Department of Employment Security file received from the Illinois Office of Communication and Information]