Local News
12:06 pm
Tue November 6, 2012

NC To Tap Tax Refunds Of Unemployment Cheaters

Cheaters who manage to keep collecting unemployment once they've found work will face stiffer penalties and the strong possibility of losing their tax refund in 2013.  The North Carolina Division of Employment Security is trying to recover nearly $50 million in fraudulent payments.

North Carolina's been paying a record amount of unemployment during this recession, so it stands to reason that fraud has increased, too.  When you get a job, you're supposed to report that to the unemployment office so they stop sending you checks.

But Division of Employment Security spokesman Larry Parker says the penalties haven't been tough enough to keep everyone honest.

"If they're lying to us and they're found guilty of that, that's a one-count misdemeanor," says Parker. "Now, anything over $400 is going to be a Class 1a Felony. So the stakes are a little bit higher for those people wanting to fraud the Division of Employment Security."

And the chances of getting caught have increased. The agency created a Fraud Integrity Group to cross-check unemployment payments with hiring reports from businesses.  Lawmakers also gave the division additional fraud-fighting tools this year with stiffer criminal penalties and the ability to collect from a cheater's federal tax refund.

"And now that the statute on limitations on recovery has been taken away, we can garnish taxes for quite awhile until we get this money back," says Parker.

The Division of Employment Security was previously only able to tap state tax refunds in recovering fraudulent payments. But considering federal tax refunds are typically much larger, Parker says the state has a better chance of collecting the full amount a cheater owes.

The division says 19,253 people currently owe the state nearly $50 million in illegal unemployment payments.