[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1163 Reported in House (RH)]
<DOC>
Union Calendar No. 21
118th CONGRESS
1st Session
H. R. 1163
[Report No. 118-34]
To provide incentives for States to recover fraudulently paid Federal
and State unemployment compensation, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 24, 2023
Mr. Smith of Missouri (for himself, Mr. Buchanan, Mr. Ferguson, Mr.
Steube, Mr. Wenstrup, Mr. Feenstra, Mr. Moore of Utah, Mr. Smucker,
Mrs. Miller of West Virginia, Mr. Estes, Ms. Van Duyne, Mrs. Steel, Ms.
Tenney, Ms. Malliotakis, Mr. Carey, Mr. Kustoff, Mr. Kelly of
Pennsylvania, Mr. Fitzpatrick, Mr. Murphy, Mr. Smith of Nebraska, Mrs.
Fischbach, Mr. LaHood, Mr. Schweikert, Mr. Arrington, Mr. Comer, and
Mr. Hern) introduced the following bill; which was referred to the
Committee on Ways and Means
April 6, 2023
Additional sponsors: Mr. Sessions, Mr. Posey, Mr. Santos, Ms. Greene of
Georgia, Mr. Donalds, Mr. Hill, Mr. Jackson of Texas, Mr. Yakym, Mr.
Rogers of Alabama, and Mr. Mast
April 6, 2023
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on
February 24, 2023]
_______________________________________________________________________
A BILL
To provide incentives for States to recover fraudulently paid Federal
and State unemployment compensation, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Protecting Taxpayers and Victims of
Unemployment Fraud Act''.
SEC. 2. RECOVERING FEDERAL FRAUDULENT COVID UNEMPLOYMENT COMPENSATION
PAYMENTS.
(a) Allowing States to Retain Percentage of Overpayments for
Program Integrity.--
(1) Pandemic unemployment assistance.--Section 2102(d) of
the CARES Act (15 U.S.C. 9021(d)) is amended by amending
paragraph (4) to read as follows:
``(4) Fraud and overpayments.--Section 2107(e) shall apply
with respect to pandemic unemployment assistance under this
section by substituting `pandemic unemployment assistance' for
`pandemic emergency unemployment compensation' each place it
appears in such section 2107(e).''.
(2) Federal pandemic unemployment compensation.--Section
2104(f)(3) of such Act (15 U.S.C. 9023(f)(3)) is amended--
(A) in subparagraph (A)--
(i) by striking ``3-year'' and inserting
``10-year''; and
(ii) by inserting ``, except that a State
may retain a percentage of any amounts
recovered as described in subparagraph (C)''
before the period at the end; and
(B) by adding at the end the following:
``(C) Retention of percentage of recovered funds.--
The State agency may retain 25 percent of any amount
recovered from overpayments of Federal Pandemic
Unemployment Compensation or Mixed Earner Unemployment
Compensation that were determined to be made due to
fraud. Amounts so retained by the State agency shall be
used for any of following:
``(i) Modernizing unemployment compensation
systems and information technology to improve
identity verification and validation of
applicants.
``(ii) Reimbursement of administrative
costs incurred by the State to identify and
pursue recovery of fraudulent overpayments.
``(iii) Hiring fraud investigators and
prosecutors.
``(iv) Other program integrity activities
as determined by the State.'';
(3) Pandemic emergency unemployment compensation.--Section
2107(e)(3) of such Act (15 U.S.C. 9025(e)(3)) is amended--
(A) in subparagraph (A)--
(i) by striking ``3-year'' and inserting
``10-year''; and
(ii) by inserting ``, except that a State
may retain a percentage of any amounts
recovered as described in subparagraph (C)''
before the period at the end; and
(B) by adding at the end the following:
``(C) Retention of percentage of recovered funds.--
The State agency may retain 25 percent of any amount
recovered from overpayments of pandemic emergency
unemployment compensation that were determined to be
made due to fraud. Amounts so retained by the State
agency shall be used for any of following:
``(i) Modernizing unemployment compensation
systems and information technology to improve
identity verification and validation of
applicants.
``(ii) Reimbursement of administrative
costs incurred by the State to identify and
pursue recovery of fraudulent overpayments.
``(iii) Hiring fraud investigators and
prosecutors.
``(iv) Other program integrity activities
as determined by the State.''.
(4) Extended unemployment compensation.--A State to which
section 4105 of the Families First Coronavirus Response Act (26
U.S.C. 3304 note) applied may retain 25 percent of any amount
recovered from overpayments of sharable extended compensation
and sharable regular compensation (as such terms are defined in
section 204 of the Federal-State Extended Unemployment
Compensation Act of 1970) paid for weeks of unemployment
described in such section 4105 that were determined to be made
due to fraud. Amounts so retained by the State agency shall be
used for any of the purposes described in section 2107(e)(3)(C)
of the CARES Act (15 U.S.C. 9025(e)(3)(C)).
(5) First week of regular compensation.--A State that was a
party to an agreement under section 4105 of the CARES Act (15
U.S.C. 9024) may retain 25 percent of any amount recovered from
overpayments of regular compensation paid to individuals by the
State for their first week of regular unemployment for which
the State received full Federal funding under such agreement in
any case in which such overpayments were determined to be made
due to fraud. Amounts so retained by the State agency shall be
used for any of the purposes described in section 2107(e)(3)(C)
of the CARES Act (15 U.S.C. 9025(e)(3)(C)).
(b) Treatment Under Withdrawal Standard and Immediate Deposit
Requirements.--Any amount retained by a State pursuant to paragraph (4)
or (5) of subsection (a) or under section 2102(d)(4), section
2104(f)(3)(C), or 2107(e)(3)(C) of the CARES Act, and used for the
purposes described therein, shall not be considered to violate the
withdrawal standard and immediate deposit requirements of paragraph (4)
or (5) of section 303(a) of the Social Security Act (42 U.S.C. 503(a))
or paragraph (3) or (4) of section 3304(a) of the Internal Revenue Code
of 1986.
(c) Limitation on Retention Authority.--The authority of a State to
retain any amount pursuant to paragraph (4) or (5) of subsection (a)
and under section 2102(d)(4), section 2104(f)(3)(C), and 2107(e)(3)(C)
of the CARES Act shall apply only--
(1) with respect to an amount recovered on or after the
date of enactment of this Act; and
(2) during the 10-year period beginning on the date on
which such amount was received by an individual not entitled to
such amount.
SEC. 3. PERMISSIBLE USES OF UNEMPLOYMENT FUND FOR PROGRAM
ADMINISTRATION.
(a) Withdrawal Standard in the Internal Revenue Code.--Section
3304(a)(4) of the Internal Revenue Code of 1986 is amended--
(1) in subparagraph (F), by striking ``and'' after the
semicolon; and
(2) by inserting after subparagraph (G) the following new
subparagraphs:
``(H) provided the certifications made by the State
as described in section 4 of the Protecting Taxpayers
and Victims of Unemployment Fraud Act are in effect at
the time of approval of the State law under this
subsection, an amount, not to exceed 5 percent, of any
overpayment of compensation recovered by the State
(other than an overpayment made as the result of agency
error) may, immediately following the State's receipt
of such recovered amount, be deposited in a State fund
from which money may be withdrawn for--
``(i) the payment of costs of deterring,
detecting, and preventing improper payments;
``(ii) purposes relating to the proper
classification of employees and the provisions
of State law implementing section 303(k) of the
Social Security Act;
``(iii) the payment to the Secretary of the
Treasury to the credit of the account of the
State in the Unemployment Trust Fund;
``(iv) modernizing the State's unemployment
insurance technology infrastructure; or
``(v) otherwise assisting the State in
improving the timely and accurate
administration of the State's unemployment
compensation law; and
``(I) provided the certifications made by the State
as described in section 4 of the Protecting Taxpayers
and Victims of Unemployment Fraud Act are in effect at
the time of approval of the State law under this
subsection, an amount, not to exceed 5 percent, of any
payments of contributions, or payments in lieu of
contributions, that are collected as a result of an
investigation and assessment by the State agency may,
immediately following receipt of such payments, be
deposited in a State fund from which moneys may be
withdrawn for the purposes specified in subparagraph
(H);''.
(b) Definition of Unemployment Fund.--Section 3306(f) of the
Internal Revenue Code of 1986 is amended by striking ``and for refunds
of sums'' and all that follows and inserting ``, except as otherwise
provided in section 3304(a)(4), section 303(a)(5) of the Social
Security Act, or any other provision of Federal unemployment
compensation law.''.
(c) Withdrawal Standard in Social Security Act.--Section 303(a)(5)
of the Social Security Act (42 U.S.C. 503(a)(5)) is amended by striking
``and for refunds of sums'' and all that follows and inserting ``except
as otherwise provided in this section, section 3304(a)(4) of the
Internal Revenue Code of 1986, or any other provisions of Federal
unemployment compensation law; and''.
(d) Immediate Deposit Requirements in the Internal Revenue Code.--
Section 3304(a)(3) of the Internal Revenue Code of 1986 is amended to
read as follows:
``(3) all money received in the unemployment fund shall
immediately upon such receipt be paid over to the Secretary of
the Treasury to the credit of the Unemployment Trust Fund
established by section 904 of the Social Security Act (42
U.S.C. 1104), except for--
``(A) refunds of sums improperly paid into such
fund;
``(B) refunds paid in accordance with the
provisions of section 3305(b); and
``(C) amounts deposited in a State fund in
accordance with subparagraph (H) or (I) of paragraph
(4);''.
(e) Immediate Deposit Requirement in Social Security Act
Requirement.--Section 303(a)(4) of the Social Security Act (42 U.S.C.
503(a)(4)) is amended by striking the parenthetical and inserting
``(except as otherwise provided in this section, section 3304(a)(3) of
the Internal Revenue Code of 1986, or any other provisions of Federal
unemployment compensation law)''.
(f) Application to Federal Payments.--When administering any
Federal program providing compensation (as defined in section 3306 of
the Internal Revenue Code of 1986), the State shall use the authority
provided under subparagraphs (H) and (I) of section 3304(a)(4) of such
Code in the same manner as such authority is used with respect to
improper payments made under the State unemployment compensation law.
With respect to improper Federal payments recovered consistent with the
authority under subparagraphs (H) and (I) of such section, the State
shall immediately deposit the same percentage of the recovered payments
into the same State fund as provided in the State law implementing that
section.
(g) Effective Date.--The amendments made by this section shall
apply to overpayments or payments or contributions (or payments in lieu
of contributions) that are collected as a result of an investigation
and assessment by the State agency after the end of the 2-year period
beginning on the date of the enactment of this Act, except that nothing
in this section shall be interpreted to prevent a State from amending
its law before the end of the 2-year period beginning on the date of
the enactment of this Act.
SEC. 4. PREVENTING UNEMPLOYMENT COMPENSATION FRAUD THROUGH DATA
MATCHING.
(a) In General.--As a condition for the eligibility of a State to
implement the exceptions to the withdrawal standard described in
subparagraphs (H) and (I) of section 3304(a)(4) of the Internal Revenue
Code, the State shall certify each of the following:
(1) Integrity data hub.--The State uses the system
designated by the Secretary of Labor (or another system at the
discretion of the State) for cross-matching claimants of
unemployment compensation to prevent and detect fraud and
improper payments.
(2) Use of fraud prevention and detection systems.--The
State has established procedures to do the following:
(A) National directory of new hires.--Use the
National Directory of New Hires established under
section 453(i) of the Social Security Act--
(i) to compare information in such
Directory against information about individuals
claiming unemployment compensation to identify
any such individuals who may have become
employed;
(ii) to take timely action to verify
whether the individuals identified pursuant to
clause (i) are employed; and
(iii) upon verification pursuant to clause
(ii), to take appropriate action to suspend or
modify unemployment compensation payments, and
to initiate recovery of any improper payments
that have been made.
(B) State information data exchange system.--Use
the State Information Data Exchange System (or another
system at the discretion of the State) to facilitate
employer responses to requests for information from
State workforce agencies.
(C) Incarcerated individuals.--Seek information
from the Commissioner of Social Security under sections
202(x)(3)(B)(iv) and 1611(e)(1)(I)(iii) of the Social
Security Act, or from such other sources as the State
agency determines appropriate, to obtain the
information necessary to carry out the provisions of a
State law under which an individual who is confined in
a jail, prison, or other penal institution or
correctional facility is ineligible for unemployment
compensation on account of such individuals inability
to satisfy the requirement under section 303(a)(12) of
such Act.
(D) Deceased individuals.--Compare information of
individuals claiming unemployment compensation against
the information regarding deceased individuals
furnished to or maintained by the Commissioner of
Social Security under section 205(r) of the Social
Security Act.
(b) Unemployment Compensation.--For the purposes of this section,
any reference to unemployment compensation shall be considered to refer
to compensation as defined in section 3306 of the Internal Revenue Code
of 1986.
SEC. 5. EXTENSION OF EMERGENCY STATE STAFFING FLEXIBILITY.
If a State modifies its unemployment compensation law and policies
with respect to personnel standards on a merit basis on an emergency
temporary basis as determined by the Secretary, including for
detection, pursuit, and recovery of fraudulent overpayments under
Federal pandemic unemployment compensation programs authorized under
the CARES Act (15 U.S.C. 9021 et seq.), subject to the succeeding
sentence, such modifications shall be disregarded for the purposes of
applying section 303 of the Social Security Act (42 U.S.C. 503) and
section 3304 of the Internal Revenue Code of 1986 to such State law.
Such modifications may continue through December 31, 2030.
SEC. 6. FRAUD ENFORCEMENT HARMONIZATION.
Notwithstanding any other provision of law, any criminal charge or
civil enforcement action alleging that an individual engaged in fraud
with respect to compensation (as defined in section 3306 of the
Internal Revenue Code of 1986) shall be filed not later than 10 years
after the offense was committed.
SEC. 7. BUDGET OFFSET.
Section 2118 of the CARES Act (15 U.S.C. 9034) is repealed.
Union Calendar No. 21
118th CONGRESS
1st Session
H. R. 1163
[Report No. 118-34]
_______________________________________________________________________
A BILL
To provide incentives for States to recover fraudulently paid Federal
and State unemployment compensation, and for other purposes.
_______________________________________________________________________
April 6, 2023
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed