A law passed by the Oregon Legislature takes aim at recovering fraudulently claimed unemployment benefits.

Senate Bill 259, passed on April 18, allows the Employment Department to intercept all or part of Federal Income Tax refunds from individuals who committed unemployment fraud in order to repay the debt.  The Employment Department already has the authority to intercept state tax refunds; the new law gives the agency another method to recoup fraudulently collected benefits.

Unemployment insurance benefits are meant for individuals who are out of work through no fault of their own.  Money for these benefits comes from the unemployment insurance trust fund, which is funded by Oregon employers.

Unemployment fraud frequently occurs when an individual claims benefits while working.  When fraud is detected, the Oregon Employment Department works to collect the improperly paid benefits.  If those collection efforts fail, the department now has the authority to intercept tax refunds.

Upon the passage of Senate Bill 259, the Employment Department mailed notices to 14,000 individuals who collectively owe $55 million due to unemployment insurance fraud.  The notices give these individuals 60 days to make payment or prove they do not owe the money, or the debt will be referred to the US Department of the Treasury for collection.

The new law strives to give the Employment Department a powerful new tool to recapture benefits paid out because of fraud and return those funds to the unemployment insurance trust fund.  This will contribute to the health of the trust fund, and protect Oregon employers' tax rates.

Oregon maintains one of the healthiest unemployment trust funds in the nation. During the most recent recession, 36 states' trust funds became insolvent causing those states to borrow money from the Federal Government in order to pay unemployment benefits.  Oregon's trust fund remained solvent during this economic downturn; ensuring benefits were available to those who qualified, while containing the tax rates for Oregon employers.

News release: Oregon Employment Department