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Lawmakers want unemployment insurance reforms following massive fraud during pandemic

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(The Center Square) – In the wake of the fraud and improper payments that dominated the unemployment insurance program in Illinois and around the country during the pandemic, Congress is getting involved.

According to the Government Accountability Office, an estimated $100 billion to $135 billion was lost to fraud during the COVID-19 pandemic alone. In Illinois, $3.2 billion was lost to fraudsters.

“We want to learn how Congress can help rebuild and restore confidence in the unemployment insurance program after the turmoil of identity theft, fraud and claim delays during the pandemic,” said Illinois U.S. Rep. Darin LaHood, R-Peoria, chair of the U.S. House Ways and Means Work and Welfare Subcommittee.

California was particularly hit hard by fraud during the pandemic.

“According to the Pandemic Response Accountability Committee, California sent $800 million in pandemic unemployment benefits to 45,000 prisoners,” said U.S. Rep. Michelle Steel, R-CA. “Improper payments to prisoners, scammers and international gangs are part of the reason California has a federal unemployment insurance loan balance to the federal government of $18.3 billion”

The U.S. House passed the Protecting Taxpayers and Victims of Unemployment Fraud Act, which aims to strengthen the program’s integrity, recover lost funds and prevent future fraud.

LaHood said outside economic downturns such as the Great Recession of 2008 and COVID-19, states routinely receive less than half of federal tax revenues paid by employers to administer the UI program.

“It’s clear that substantial amounts of tax revenue raised specifically for UI administration is not ending up in the state agency hands to enact needed system improvements,” said LaHood.

Witnesses during a recent Ways and Means Work and Welfare Subcommittee hearing identified key areas ripe for reform in the UI program to make it more efficient and accountable. These include strengthening program integrity through identity verification and upgraded technology, expanding reemployment services to get people receiving unemployment quickly back to work, and ensuring states receive funds intended to help them administer the UI program.

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