Less than two months into the most aggressive unemployment insurance fraud crackdown in the state’s history, the Mississippi Department of Employment Security has recovered $12.6 million in benefits collected by people who also were earning a paycheck.
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This recovery is part of more than $34 million that 29,000 Mississippians owe the government in fraudulently obtained unemployment benefits, said Les Range, deputy executive director for communications at MDES. The most common offenders are those who return to work but fail to report to the agency that they’re no longer eligible for assistance.
The agency is working to educate recipients that the sooner they report their new job, the better.
The state won’t get back the full $34 million. Executive Director Mark Henry said some of those who owe the government money collected their checks in the 1930s and ’40s and may no longer be alive. Of those Mississippians who could pay back, some will not file tax returns this year so their funds won’t be recovered.
“But I think it’s something that all Mississippians can be proud of – that in less than two months, we’ve recovered more than a third of what’s owed,” he said.
The U.S. Department of Labor developed the Treasury Offset Program, or TOP, and encouraged states to participate. Beginning Jan. 30, Mississippi joined the second wave of states to carry out the recovery effort in which not only a percentage of uncooperative offenders’ wages can be garnisheed but also their federal tax refunds.
Since 2006, MDES has been operating a similar program in which state tax refunds are garnisheed. That program has raised $13. 3 million.
The recollected money goes into the federal Unemployment Benefits Trust Fund, which provides assistance to citizens who are out of work.
Gov. Phil Bryant congratulated the agency for recovering the funds.
“The efforts by MDES will ensure any unemployment benefits go to those who are in need and not those who intentionally abuse it,” he said in a news release.
Gwen Moncure, bureau director for technical services at the agency, said MDES is working to make sure this fraud doesn’t continue.
“Unfortunately, we cannot prevent all fraud,” she said, “but we are soliciting the help of the employers to prevent fraud.”
To determine that fraud has occurred, state officials compare the records of those collecting unemployment with payroll information submitted by employers.
Often, offenders are able to gradually pay back the benefits they obtained fraudulently.
“We will tell the individual if you pay us $150 every 30 days; we will look at that as a good-faith effort for you to pay this debt,” said LeAnne Brady, MDES senior attorney.
Those consistently repaying the government accrue interest at 1 percent per month. As long as they pay, the government won’t take legal action against them.
If they don’t, the department can garnishee up to 25 percent of their disposable wages and their federal tax refunds.
Criminal charges are filed in only the most extreme cases. Last month, six people from around the state were indicted for owing egregious amounts.
Collectively, they owed $80,534.
The recovered funds not only help people without jobs but also can help lower unemployment taxes employers pay.
“The money that is used to pay unemployment benefits comes from Mississippi employers through an unemployment compensation tax,” Henry explained. “Every dollar that we’re able to recover and put back in that fund is one dollar less that Mississippi employers have to pay in that tax.”
Ron Aldridge, state director of the National Federation of Independent Businesses, said lowering that tax rate can make a big difference for some employers.
The maximum tax rate is 5.4 percent on the first $14,000 earned by each employee. “That can add up quickly,” he said.
Aldridge, who represents 3,500 small businesses in the state, said seasonal businesses that experience more turnover in their work forces will have a higher unemployment tax rate than businesses that employ workers for longer periods.
“Or through this recessionary period of time,” he said, “there were some companies that had to consistently reduce their work force just to maintain.
“It wasn’t that they did anything wrong; it’s just that the economy hit them so hard,” he said. “So the restoring of those funds to the system will certainly help them in the future to get their taxes lowered.”
Aldridge said more money in the unemployment fund is good not only for employers.
Another option to lowering taxes is increasing the benefits available to the unemployed. Aldridge said the Legislature periodically considers what benefits should be available based on how much money is in the fund.
“More fraud money brought back into the fund can assist the employers and the employees,” he said.
“… In less than two months, we’ve recovered more than a third of what’s owed.”
