[Congressional Record Volume 169, Number 80 (Thursday, May 11, 2023)]
[House]
[Pages H2281-H2293]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       PROTECTING TAXPAYERS AND VICTIMS OF UNEMPLOYMENT FRAUD ACT

  Mr. SMITH of Missouri. Mr. Speaker, pursuant to House Resolution 383, 
I call up the bill (H.R. 1163) to provide incentives for States to 
recover fraudulently paid Federal and State unemployment compensation, 
and for other purposes, and ask for its immediate consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 383, the 
amendment in the nature of a substitute recommended by the Committee on 
Ways and Means, printed in the bill, modified by the amendment printed 
in House report 118-51, is adopted and the bill, as amended, is 
considered read.
  The text of the bill, as amended, is as follows:

                               H.R. 1163

       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)

[[Page H2282]]

     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.

     SEC. 8. STATE FUND CONTINGENCY.

       Subject to appropriations, the unobligated balance as of 
     the day before the date of the enactment of this Act of 
     amounts made available under section 2118 of the CARES Act 
     (15 U.S.C. 9034) shall be transferred to the Secretary of the 
     Treasury and periodically credited, on an as-needed basis, to 
     the appropriate State account in the Unemployment Trust Fund 
     established by section 904 of the Social Security Act (42 
     U.S.C. 1104) in an amount that replaces the amount deposited 
     by a State in a State fund in accordance with subparagraph 
     (H) or (I) of section 3304(a)(4) of the Internal Revenue Code 
     of 1986 (as amended by section 3(a) of this Act) if the 
     amount in such State account is less than the amount that 
     would be in such State account if such subparagraphs had not 
     been enacted.


[[Page H2283]]


  The SPEAKER pro tempore. The bill, as amended, shall be debatable for 
1 hour equally divided and controlled by the chair and ranking minority 
member of the Committee on Ways and Means or their respective 
designees.
  The gentleman from Missouri (Mr. Smith) and the gentleman from 
Illinois (Mr. Davis) each will control 30 minutes.
  The Chair recognizes the gentleman from Missouri (Mr. Smith).


                             General Leave

  Mr. SMITH of Missouri. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days in which to revise and extend their 
remarks and include extraneous material on the bill under 
consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Missouri?
  There was no objection.
  Mr. SMITH of Missouri. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, this crucial legislation will finally protect taxpayers 
and victims of fraud against the largest theft of tax dollars in 
American history.
  Americans are suffering under a cost-of-living crisis fueled by 
Democrats' reckless spending. It has brought us to the brink of 
recession and spurred the highest increase in interest rates in 16 
years.
  It must be infuriating for folks to also see that it is not just the 
American Dream that is being stolen from them but their identities and 
their tax dollars.
  Criminal organizations and foreign fraudsters exploited the pandemic 
to steal hundreds of billions in payments intended to keep workers 
afloat amidst government lockdowns, and the victims need our help.
  How much has been stolen? The Department of Labor inspector general 
told the Ways and Means Committee that taxpayers may be on the hook for 
at least $191 billion in improper payments, and that is just the lower 
estimate. Outside experts estimate up to $400 billion of improper 
payments.
  While working Americans were trying to piece their lives back 
together during the pandemic, Democrats did nothing to fight fraud. 
When Democrats held the majority on Ways and Means, they ignored, 
blocked, and shot down commonsense safeguards and refused to hold even 
one hearing on this fraud.
  That inaction made it clear that their soft-on-crime agenda does not 
just apply to carjackings and looting department stores. It applies to 
defrauding the Federal Government, as well.
  During his State of the Union, President Biden said the watchdogs are 
back. He rolled out the position of chief pandemic prosecutor at the 
Department of Justice. Since then, even as we have discovered more 
instances of fraud, the Biden administration official responsible for 
prosecuting it has resigned, and the position sits vacant for months.
  That is not accountability. We couldn't afford inaction for the last 
2 years, and we can afford it even less today.
  These are stolen tax dollars, which makes every person in America a 
victim of this fraud. Today's vote is an important step toward ending 
suffering and delivering accountability.
  The Protecting Taxpayers and Victims of Unemployment Fraud Act gives 
States the tools they need to go after fraudsters and shores up 
vulnerabilities by improving identity verification and modernizing 
State UI systems.
  It allows States to retain 25 percent of fraudulent Federal funds 
recovered. This is a real incentive for States to pursue what can be 
costly investigations and prosecutions because now they can use 
recovered funds to improve UI program integrity and fraud prevention. 
These dollars can go toward hiring investigators and prosecutors to go 
after criminals to recover fraud payments. This will also give States 
the resources to modernize systems and technology to better verify 
identity and income for unemployment and deter, detect, and prevent 
improper payments.
  This legislation also allows States to keep 5 percent of UI 
overpayments recouped in the future to continue to improve benefit 
delivery and eligibility verification. This includes matching State 
lists against databases, which will help reduce payments to deceased 
and incarcerated individuals.
  Many of these reform ideas are bipartisan and very long overdue. Some 
are supported by the Department of Labor inspector general and were 
even included in past budget requests from President Trump and 
President Obama. Even Biden has included several of the ideas in the 
Protecting Taxpayers and Victims of Unemployment Fraud Act in his most 
recent budget request.
  I am hopeful House Democrats will join here to also protect taxpayers 
and support this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield myself such time as I may 
consume.
  Democrats strongly agree that those who took advantage of the COVID 
crisis to commit fraud must be held accountable. Indeed, Democrats put 
$2 billion in the American Rescue Plan Act to fight fraud, and every 
House Republican voted against these investments to prevent fraud and 
hold criminals accountable.
  These Democratic anti-fraud dollars helped the Department of Labor 
create an important cross-checking system to catch fraudsters who apply 
for unemployment in one State while receiving income in another, a 
practice for which a Republican House Member reportedly was indicted 
earlier this week.
  Republicans are playing a dangerous game by cutting ongoing 
successful work by the Federal Government to fight fraud and leaving 
States to pick up the pieces.
  The Department of Labor expressed deep concern about how H.R. 1163 
will ``throttle essential, ongoing efforts to strengthen and protect 
the UI program.''
  Instead of punishing organized crime, the Republican H.R. 1163 guts 
Federal funding to fight fraud, weakens State unemployment systems, 
privatizes American public service jobs, and sends cruel surprise bills 
to innocent workers who were unemployed during the pandemic.
  We enacted bipartisan pandemic unemployment benefits that kept an 
estimated 5 million people a year from falling into poverty.

                              {time}  1445

  This assistance meant revenue and customers for businesses and helps 
spur our economic recovery. Unfortunately, when disaster struck, State 
unemployment systems were not prepared. Mistakes were made and 
thousands of workers were overpaid.
  Again, we worked in bipartisan fashion to encourage States to waive 
overpayments to protect unemployed workers. Now, Republicans want to 
force States to claw back accidental overpayments from workers up to 10 
years later.
  When my GOP colleagues incorrectly assert that the bill limits the 
claw back of overpayments to fraud, they are only referring to a very 
narrow limit on the ability of States to keep portions of recovered 
fraud payments.
  My Democratic colleagues and I offered many amendments to invest in 
antifraud efforts, protect workers, and strengthen State unemployment 
systems. The Republicans rejected every amendment.
  Instead, the GOP careens ahead with H.R. 1163 that the CBO estimates 
is a net cut in Federal investment in fighting unemployment fraud and 
strengthening unemployment systems.
  That is why so many organizations oppose H.R. 1163, including the 
AFL-CIO; the American Federation of State, County and Municipal 
Employees; the Center on Budget and Policy Priorities; the 
Communications Workers of America; the National Employment Law Project; 
and the Service Employees International Union.
  Mr. Speaker, I urge my colleagues to oppose this dangerous bill, and 
I reserve the balance of my time.
  Mr. SMITH of Missouri. Mr. Speaker, I yield 3 minutes to the 
gentleman from Illinois (Mr. LaHood), chairman of the Work and Welfare 
Subcommittee.
  Mr. LaHOOD. Mr. Speaker, I thank Chairman Smith for yielding.
  Mr. Speaker, today, Republicans are following through on our promise 
to the American people last fall in our commitment to a government that 
is accountable.

[[Page H2284]]

  I rise in strong support of H.R. 1163. This long-awaited bill is 
needed to address the unprecedented levels of fraud in pandemic 
unemployment programs.
  Every dollar going to fraud is a dollar that did not go to those who 
actually needed it. My home State of Illinois paid out nearly $2 
billion in Federal funds for fraudulent unemployment claims, nearly 
half of the money paid out by the State.
  Mr. Speaker, I include in the Record an audit by the State of 
Illinois Department of Economic Security from June 2020.

          STATE OF ILLINOIS DEPARTMENT OF EMPLOYMENT SECURITY

 Individual Nonshared Proprietary Fund, Financial Statements--For the 
                        Year Ended June 30, 2021

Performed as Special Assistant Auditors For the Auditor General, State 
                              of Illinois

    Independent Auditor's Report on Internal Control Over Financial 
  Reporting and on Compliance and Other Matters Based on an Audit of 
 Financial Statements Performed in Accordance with Government Auditing 
                               Standards

     Hon. Frank J. Mautino
     Auditor General, State of Illinois

       As Special Assistant Auditors for the Auditor General, we 
     were engaged to audit, in accordance with the auditing 
     standards generally accepted in the United States of America 
     and the standards applicable to financial audits contained in 
     Government Auditing Standards issued by the Comptroller 
     General of the United States, the financial statements of the 
     Unemployment Compensation Trust Fund (Trust Fund), an 
     individual nonshared proprietary fund of the State of 
     Illinois, Department of Employment Security (Department), as 
     of and for the year ended June 30, 2021, and the related 
     notes to the financial statements, which collectively 
     comprise the Trust Fund's basic financial statements, and 
     have issued our report thereon dated June 3, 2022. Our report 
     disclaims an opinion on such financial statements due to 
     material weaknesses in internal control over one of the 
     benefit payment systems, for which we were unable to obtain 
     sufficient appropriate audit evidence over related amounts.


               Internal Control Over Financial Reporting

       In connection with our engagement to audit of the financial 
     statements, we considered the Department's internal control 
     over financial reporting (internal control) as a basis for 
     designing audit procedures that are appropriate in the 
     circumstances for the purpose of expressing our opinion on 
     the financial statements, but not for the purpose of 
     expressing an opinion on the effectiveness of the 
     Department's internal control. Accordingly, we do not express 
     an opinion on the effectiveness of the Department's internal 
     control.
       A deficiency in internal control exists when the design or 
     operation of a control does not allow management or 
     employees, in the normal course of performing their assigned 
     functions, to prevent, or detect and correct, misstatements 
     on a timely basis. A material weakness is a deficiency, or a 
     combination of deficiencies, in internal control, such that 
     there is a reasonable possibility that a material 
     misstatement of the entity's financial statements will not be 
     prevented, or detected and corrected, on a timely basis. A 
     significant deficiency is a deficiency, or a combination of 
     deficiencies, in internal control that is less severe than a 
     material weakness, yet important enough to merit attention by 
     those charged with governance.
       Our consideration of internal control was for the limited 
     purpose described in the first paragraph of this section and 
     was not designed to identify all deficiencies in internal 
     control that might be material weaknesses or significant 
     deficiencies and, therefore, material weaknesses or 
     significant deficiencies may exist that have not been 
     identified. We did identify certain deficiencies in internal 
     control, described in the accompanying Schedule of Findings 
     as items 2021-001 through 2021-003 that we consider to be 
     material weaknesses.


                      Compliance and Other Matters

       In connection with our engagement to audit the financial 
     statements of the Trust Fund, we performed tests of its 
     compliance with certain provisions of laws, regulations, 
     contracts, and grant agreements, noncompliance with which 
     could have a direct and material effect on the financial 
     statements. However, providing an opinion on compliance with 
     those provisions was not an objective of our audit and, 
     accordingly, we do not express such an opinion. The results 
     of our tests disclosed instances of noncompliance or other 
     matters that are required to be reported under Government 
     Auditing Standards and which are described in the 
     accompanying Schedule of Findings as items 2021-001 through 
     2021-003. Additionally, if the scope of our work had been 
     sufficient to enable us to express an opinion on the 
     financial statements of the Trust Fund, other instances of 
     noncompliance or other matters may have been identified and 
     reported herein.


                 Department's Responses to the Findings

       The Department's responses to the findings identified in 
     our engagement are described in the accompanying Schedule of 
     Findings. The Department's responses were not subjected to 
     the auditing procedures applied in the engagement to audit 
     the financial statements and, accordingly, we express no 
     opinion on the responses.


                         Purpose of this Report

       The purpose of this report is solely to describe the scope 
     of our testing of internal control and compliance and the 
     results of that testing, and not to provide an opinion on the 
     effectiveness of the entity's internal control or on 
     compliance. This report is an integral part of an engagement 
     to perform an audit in accordance with Government Auditing 
     Standards in considering the entity's internal control and 
     compliance. Accordingly, this communication is not suitable 
     for any other purpose.


            Current Findings--Government Auditing Standards

 Finding 2021-001--Failure to Implement General Information Technology 
       Controls Over the Pandemic Unemployment Assistance System

       The Department of Employment Security (Department) failed 
     to implement general Information Technology (IT) controls 
     over the Pandemic Unemployment Assistance (PUA) System 
     (System).
       In April 2020, the Department contracted with a service 
     provider to provide the System as a Software as a Service 
     (SaaS) and to provide hosting services for the System. The 
     service provider maintained full control over the system.
       In order to determine if general IT controls were suitably 
     designed and operating effectively over the System, we 
     requested the Department provide a System and Organization 
     Control (SOC) report for the service provider. As was noted 
     in the prior audit, the Department could not provide a SOC 
     report, as the service provider's contract did not require 
     the service provider to undergo a SOC examination. Therefore, 
     we conducted testing of the general IT control of the System.
     Change Control
       As was noted in the prior audit, the service provider's 
     developers continued to have access to the production 
     environment. As a result, we were unable to determine if the 
     developers made unauthorized changes to the environment, 
     application, and data.
     Security
       The Department had not implemented internal controls over 
     the System's access.
     Disaster Recovery
       The Department had not implemented disaster recovery 
     controls.
       The Security and Privacy Controls for Information Systems 
     and Organizations (Special Publication 800-53, Fifth 
     Revision) published by the National Institute of Standards 
     and Technology (NIST), Maintenance and System and Service 
     Acquisition sections, require entities outsourcing their IT 
     environment or operations to obtain assurance over the 
     entities' internal controls related to the services provided. 
     Such assurance may be obtained via System and Organization 
     Control reports or independent reviews. In addition, the 
     Access Control section, sanctions the implementation of 
     internal controls over access. The Configuration Management 
     section also enforces logical restrictions with changes to 
     systems. Further, the Contingency Planning section makes 
     compulsory the development of a detailed disaster recovery 
     plan.
       The Fiscal Control and Internal Auditing Act (30 ILCS 10/
     3001) requires all State agencies to establish and maintain a 
     system, or systems, of internal fiscal and administrative 
     controls to provide assurance funds, property, and other 
     assets and resources are safeguarded against waste, loss, 
     unauthorized use and misappropriation and maintain 
     accountability over the State's resources.
       The Department indicated the service provider's contract 
     did not require a SOC report to be provided. Additionally, 
     the Department indicated competing priorities resulted in the 
     other weaknesses.
       As a result of the lack of general IT controls over the 
     System, we were unable to rely on the System and the proper 
     determination of claimant eligibility data and benefits paid. 
     Furthermore, as a result of the lack of internal controls 
     identified in this finding and finding 2021-002, we are 
     unable to obtain sufficient documentation to determine if the 
     Department's Fiscal Year 2021 financial statements are fairly 
     presented. Therefore, we are issuing a disclaimer of opinion 
     over the Department's Fiscal Year 2021 Unemployment 
     Compensation Trust Fund financial statements. (Finding Code 
     No. 2021-001, 2020-001)


                             Recommendation

       We recommend the Department ensure the service provider's 
     contract requires obtaining a SOC report or an independent 
     review. We also recommend the Department ensure the service 
     provider's developers' access is restricted and changes are 
     appropriate. Further, we recommend the Department develop and 
     implement security controls and disaster recovery controls.


                          Department Response

       IDES accepts the auditor's recommendation. In 2021, IDES 
     took action to address the points raised in the finding. The 
     improvements to the PUA system were implemented within a 
     timeframe that did not impact the entire 2021 audit period. 
     As recommended, a contract is in place requiring the PUA 
     system service provider to secure a SOC report for FY22. The 
     system access of the PUA service provider's developers has 
     been restricted

[[Page H2285]]

     and accurately documented. In addition, documentation for PUA 
     system disaster recovery, as well as security controls, are 
     in place and have been reviewed and documented.


 Finding 2021-002--Failure to Maintain Accurate and Complete Pandemic 
                 Unemployment Assistance Claimant Data

       The Department of Employment Security (Department) failed 
     to maintain accurate and complete Pandemic Unemployment 
     Assistance (PUA) claimant data.
       On March 27, 2020, the President of the United States 
     signed the Coronavirus Aid, Relief, and Economic Security 
     (CARES) Act which provided states the ability to provide 
     unemployment insurance to individuals affected by the 
     pandemic, including those who would not normally be eligible 
     for unemployment. Based on the Department's records, as of 
     June 30, 2021, 424,887 claimants had received benefits 
     totaling $8,168,499,998.
       From June 2021 through January 2022, the Department 
     attempted to provide complete and accurate PUA claimant data 
     in order to determine if the claimants were properly 
     determined eligible. After several attempts and considerable 
     manipulation of the data to make the data more auditable and 
     organized, it was determined complete and accurate PUA 
     claimant data could not be provided. Therefore, we were 
     unable to conduct detailed testing to determine whether the 
     PUA claimants were entitled to benefits.
       The Fiscal Control and Internal Auditing Act (30 ILCS 10/
     3001) requires all State agencies to establish and maintain a 
     system, or systems, of internal fiscal and administrative 
     controls to provide assurance funds, property, and other 
     assets and resources are safeguarded against waste, loss, 
     unauthorized use and misappropriation and maintain 
     accountability over the State's resources.
       Also, due to these conditions, we were unable to conclude 
     the PUA claimant data records were complete and accurate 
     under the Professional Standards promulgated by the American 
     Institute of Certified Public Accountants (AU-C 500.08 and 
     AT-C 205.35).
       The Department indicated the PUA system limitations and 
     data entry errors resulted in the weaknesses.
       Due to the inability to conduct detailed claimant testing, 
     we were unable to determine whether the Department's 
     financial statements accurately document the PUA benefits 
     paid during Fiscal Year 2021. Therefore, we are issuing a 
     disclaimer of opinion over the Department's Fiscal Year 2021 
     Unemployment Compensation Trust Fund financial statements. 
     (Finding Code No. 2021-002)


                             Recommendation

       We recommend the Department implement controls to ensure 
     the claimants' data is complete and accurate.


                          Department Response

       IDES accepts the auditor's recommendation. The department 
     continues to work with the PUA system service provider and 
     the Department of Innovation and Technology (DoIT) staff to 
     refine the PUA database information and develop a reporting 
     structure that conforms with auditors' expectations. Errors 
     and anomalies within the PUA system have been identified and 
     are being addressed to ensure claimant data is complete and 
     reliable.


    Finding 2021-003--Failure to Perform Timely Cash Reconciliations

       The Department of Employment Security (Department) did not 
     prepare its year end bank reconciliations timely.
       As part of our engagement, we requested the June 30, 2021 
     bank reconciliations. The reconciliations are between cash as 
     recorded in the Department's general ledger, and cash as 
     reported by the bank for each account. The Department did not 
     have the reconciliations prepared timely for audit fieldwork 
     and we received the final versions of the June 2021 
     reconciliations on December 23, 2021.
       The timely reconciliation of cash accounts is a basic 
     control procedure that should occur every month to determine 
     the recorded amount of cash is accurate. Normally this 
     procedure is performed shortly after the end of the month 
     upon receipt of the bank statement. Most organizations have a 
     regular monthly accounting schedule whereby the monthly 
     general ledger cannot be closed without the preparation of 
     the cash reconciliation.
       Concepts Statement No. 1 of the Governmental Accounting 
     Standards Board, Objectives of Financial Reporting (GASBCS 1, 
     paragraph 64), states, ``Financial reporting should be 
     reliable; that is, the information presented should be 
     verifiable and free from bias and should faithfully represent 
     what it purports to represent. To be reliable, financial 
     reporting needs to be comprehensive.'' The reconciliation of 
     cash accounts is a basic control to ensure the accuracy and 
     reliability of financial reports.
       The Fiscal Control and Internal Auditing Act (30 ILCS 10/
     3001) requires State agencies to establish and maintain a 
     system, or systems, of internal fiscal and administrative 
     controls to ensure State resources are used efficiently and 
     effectively. This includes the timely performance of bank 
     reconciliations.
       Department management indicated the weaknesses were due to 
     turnover in personnel and the inability to quickly move 
     employees into this area to perform this function as 
     workloads increased significantly as a result of the new 
     CARES Act unemployment programs.
       Since the Department has numerous cash transactions every 
     month, the risk of error due to misapplied cash transactions 
     is significant. Monthly there can be over $1 billion in cash 
     that flows through the Department's various cash accounts. 
     Monthly and annual financial statements could be materially 
     misstated due to the lack of timely bank reconciliations. 
     Failure to properly complete timely bank reconciliations 
     could also result in a misuse or misappropriation of cash 
     that could go undetected. (Finding Code No. 2021-003, 2020-
     004)


                             Recommendation

       The Department should prepare a monthly reconciliation for 
     every cash account, reconciling the bank and general ledger 
     balances. Each monthly bank reconciliation should be timely 
     completed and reviewed and approved by a supervisor.


                          Department Response

       IDES accepts the auditor's recommendation. In 2021, IDES 
     contracted with a professional accounting firm to assist 
     department staff with the cash reconciliation work required 
     for seven programs, including the new federal programs such 
     as PUA and PEUC that were enacted in response to the 
     pandemic. In consultation with a professional accounting 
     firm, department procedures are undergoing review and 
     revision to ensure cash reconciliations for all programs are 
     completed on a timely basis.


                      Prior Findings Not Repeated

       A. Failure to Accurately Determine Claimants' Eligibility 
     for Pandemic Unemployment Assistance:
       In the prior audit, the Department of Employment Security 
     (Department) failed to ensure Pandemic Unemployment 
     Assistance claimants met eligibility requirements.
       In the current audit, the Department was unable to provide 
     complete and accurate claimant data. Therefore, we were 
     unable to conduct detailed testing as noted in Finding 2021-
     002. We will review the Department's progress in the next 
     audit. (Finding Code No. 2020-002)
       B. Inadequate Controls over Pandemic Unemployment 
     Assistance Program Processes:
       During the prior audit, the Department did not implement 
     adequate controls over the Pandemic Unemployment Assistance 
     (PUA) program processes.
       In the current audit, as noted in Finding 2021-002, the 
     Department was unable to provide complete and accurate 
     claimant data. Therefore, we were unable to conduct detailed 
     testing. We will review the Department's progress in the next 
     audit. (Finding Code No. 2020-003)
       C. Inadequate Controls over Accruals:
       During the prior audit, the Department did not have 
     sufficient internal control over the determination of 
     accruals for payments related to both the Unemployment 
     Insurance program (UI) and the Pandemic Unemployment 
     Assistance Program (PUA).
       In the current audit, as noted in Finding 2021-002, the 
     Department was unable to provide complete and accurate 
     claimant data. Therefore, we were unable to conduct detailed 
     testing. We will review the Department's progress in the next 
     audit. (Finding Code No. 2020-005)
       D. Inadequate Controls over Receivable Allowance:
       During the prior audit, the Department did not have 
     sufficient internal control over the estimate of the 
     allowance for doubtful accounts recorded in its financial 
     statements.
       In the current audit, as noted in Finding 2021-002, the 
     Department was unable to provide complete and accurate 
     claimant data. Therefore, we were unable to conduct detailed 
     testing. We will review the Department's progress in the next 
     audit. (Finding Code No. 2020-006, 2019-001)
       E. Inadequate Controls over GenTax Access:
       During the prior audit, the Department did not ensure 
     adequate security over the enterprise-wide tax system 
     (GenTax).
       In the current audit, sample testing did not contain 
     significant errors that would affect the financial 
     statements. (Finding Code No. 2020-007, 2019-005, 2018-008)

  Mr. LaHOOD. Those fraudsters acted with intent and malice and 
diverted critical relief for unemployed workers. Early on in the 
pandemic, multiple red flags were raised by law enforcement agencies 
about the threat of fraudsters using stolen identities to file false 
unemployment claims.
  The U.S. Secret Service raised the first alarm issuing an alert memo 
in May 2020 warning of a well-organized Nigerian crime ring exploiting 
the COVID-19 crisis to commit large-scale fraud against State 
unemployment insurance programs.
  Mr. Speaker, I include in the Record that memo from the U.S. Secret 
Service.

                                                     May 14, 2020.
     From: United States Secret Service.

      Massive Fraud Against State Unemployment Insurance Programs

       The United States Secret Service has received reporting of 
     a well-organized Nigerian fraud ring exploiting the COVID-19 
     crisis to commit large-scale fraud against state unemployment 
     insurance programs. The primary state targeted so far is 
     Washington, while there is also evidence of attacks in North 
     Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming and 
     Florida. It is

[[Page H2286]]

     extremely likely every state is vulnerable to this scheme and 
     will be targeted if they have not been already.
       In the state of Washington, individuals residing out-of-
     state are receiving multiple ACH deposits from the State of 
     Washington Unemployment Benefit Program, all in different 
     individuals' names with no connection to the account holder. 
     A substantial amount of the fraudulent benefits submitted 
     have used PII from first responders, government personnel and 
     school employees. It is assumed the fraud ring behind this 
     possess a substantial PII database to submit the volume of 
     applications observed thus far.
       This fraud network is believed to consist of hundreds, if 
     not thousands, of mules with potential losses in the hundreds 
     of millions of dollars. The banks targeted have been at all 
     levels including local banks, credit unions, and large 
     national banks.
       Please communicate the information regarding this fraud to 
     the appropriate office at your local state level and liaison 
     with local financial institutions to identify mules and 
     potential seizures.

  Mr. LaHOOD. Mr. Speaker, the public needed to know what was happening 
to these funds, yet not a single oversight hearing was held at the 
time. Democrats turned a blind eye to the fraud and rejected Republican 
efforts to stop it.
  While considering the American Rescue Act in committee, Democrats 
rejected Republican amendments that would have stopped the ``pay and 
chase'' model of benefit delivery.
  In September of 2022, Democrats voted against a resolution of inquiry 
demanding communications showing the Department of Labor had knowledge 
of unemployment insurance dollars flowing to international crime 
syndicates.
  Now, today, Republicans are taking action.
  We will not turn our backs and walk away from the greatest theft of 
taxpayer dollars in American history.
  Currently, State workforce agencies have little incentive to pursue 
costly investigations and prosecutions that do not pay out. This bill 
here today, H.R. 1163, will jump-start efforts to recover what we can 
by making the juice worth the squeeze for States still working through 
a backlog of suspicious unemployment claims and appeals.
  The number of individuals or entities facing UI fraud-related charges 
has grown since March 2020 and will continue to increase as these cases 
take time to develop.
  Based on an analysis of the U.S. Department of Justice from January 
13, 2023, Federal charges were pending against up to 240 individuals 
for attempting to defraud pandemic UI programs.
  States that take the initiative will be allowed to retain a portion 
of the recovered funds to prevent future fraud by using the recovery 
reward to improve program integrity, including hiring investigators to 
go after criminals and modernizing State systems.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. SMITH of Missouri. Mr. Speaker, I yield an additional 30 seconds 
to the gentleman from Illinois.
  Mr. LaHOOD. Mr. Speaker, this bill allows a State to retain 5 percent 
of the recovered UI overpayments. This includes having commonsense 
procedures in place, like preventing UI benefit payments from going to 
incarcerated people and deceased people.
  We have an opportunity today to gain some restitution for American 
taxpayers.
  Mr. Speaker, I urge my colleagues to support H.R. 1163.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield 90 seconds to the 
gentleman from Texas (Mr. Doggett).
  Mr. DOGGETT. Mr. Speaker, after President Trump twiddled, while 
thousands of Americans died of COVID, we entered a national crisis. In 
that emergency, the Trump administration, the Biden administration, and 
the States did not do enough to prevent fraud in this and other 
programs.
  If Republicans were genuinely interested in strengthening any fraud 
efforts, as I certainly am, we could, today, approve bipartisan 
legislation to do that. Instead, they rejected many of the important 
recommendations from their own witnesses before our committee from the 
Government Accountability Office and the inspector general told us were 
necessary.
  Instead of protecting taxpayers today from fraud, they use this 
misnamed bill to actually cut the very funding that is required for any 
fraud and recovery of wrong payments. When millions of Texans found 
themselves out of a job, the Texas Workforce Commission was not ready 
to provide a lifeline.
  Even in the middle of the night, my neighbors could not get through 
to get the insurance to which they were entitled. Little wonder that 
the same State agency did a sorry job of preventing fraud.
  The vast majority of Texans, who eventually received unemployment, 
were entitled to it, unlike apparently an indicted member of the 
Republican Caucus. Our unemployment insurance system should be 
strengthened, not undermined, as this very bill would do.
  Mr. SMITH of Missouri. Mr. Speaker, I yield 2 minutes to the 
gentleman from Pennsylvania (Mr. Smucker).
  Mr. SMUCKER. Mr. Speaker, I thank the chairman for yielding.
  Mr. Speaker, the premise of this bill is simple: Criminals and 
fraudsters should be held accountable for dollars that were illegally 
obtained, and we ought to ensure that this doesn't happen again.
  We can argue, we can talk about how we got here, who is responsible, 
but I can tell you, as a member of the Ways and Means Committee, 
Republicans spent the last 3 years pleading with the Biden 
administration and with Democrats for answers on the impact of 
unemployment fraud, for ways to stop it, and the steps that we need to 
recover as much of it as possible. Unfortunately, it fell on deaf ears, 
and now we have some counts as high as $400 billion that were lost to 
fraud or improper payments under the program.
  That is money that should have been supporting our constituents that 
were struggling from job loss during the pandemic. Instead, it went to 
criminals and cheats.
  In my district, too many unemployed individuals could not access 
payments because those benefits had already been claimed by scam 
artists.
  Similarly, for the last two tax filing seasons, many of my 
constituents have only found out then that they were a victim of 
identity theft when they got a 1099 in the mail that says they owe 
taxes on unemployment benefits they never claimed.
  Now, they are stuck fighting the IRS to rectify their tax bill and 
hung out to dry trying to reclaim their identity. Finally, after 3 
years, House Republicans are taking this important step today to right 
this wrong. This legislation gives States both the incentives and the 
tools needed to prosecute criminals and recover fraudulent payments.
  It takes the steps that we should have taken 3 years ago to prevent 
fraud in the first place. I do want to be clear: This bill is not about 
taking away employment benefits from those who relied on them, who 
needed them during the pandemic.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. SMITH of Missouri. Mr. Speaker, I yield an additional 30 seconds 
to the gentleman from Pennsylvania.
  Mr. SMUCKER. It is not about taking away unemployment benefits for 
those who relied on them. It is quite the opposite. This bill goes 
after those who robbed unemployment benefits from those who need it.
  Mr. Speaker, I am hopeful that my colleagues on the other side of the 
aisle will recognize that this is commonsense legislation to right a 
wrong and to protect our constituents and our taxpayers.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield 1 minute to the gentleman 
from California (Mr. Thompson).
  Mr. THOMPSON of California. Mr. Speaker, I thank the gentleman for 
yielding.
  Mr. Speaker, the COVID-19 pandemic significantly impacted the 
economies of every country around the world, resulting in great 
economic shutdown. However, our country, the United States, came out of 
the pandemic ahead of other nations because we expanded programs such 
as unemployment insurance.
  Sadly, this bill seeks to target Americans who received overpayment 
from the government at no fault of their own instead of going after 
those who committed fraud.
  During the bill's markup and later in the Rules Committee, I offered 
an amendment that would amend the criminal code to extend the statute 
of limitations to 10 years, as recommended by the Department of Labor 
Inspector General and legal experts so we could get the crooks.

[[Page H2287]]

  However, the Republicans decided to go after public servants and 
retirees instead of the criminals. One of the other members said that 
criminals and cheats need to be brought to justice. They do. Extend the 
statute of limitations and we can do it. We can catch the bad guys. We 
can catch the crooks. We can get the taxpayer money back.
  Mr. SMITH of Missouri. Mr. Speaker, I yield 2\1/2\ minutes to the 
gentlewoman from New York (Ms. Tenney).
  Ms. TENNEY. Mr. Speaker, I rise in support of H.R. 1163, the 
Protecting Taxpayers and Victims of Unemployment Fraud Act. This bill 
makes meaningful strides to recover hundreds of billions of dollars in 
fraudulent unemployment benefits.
  Congress has the responsibility to oversee our Nation's unemployment 
programs and rein in rampant fraud. Unfortunately, for years, Democrats 
virtually refused to acknowledge the extent of this issue while 
taxpayers and small businesses in New York's 24th District were forced 
to foot the bill.
  Criminal organizations, including international cybercrime rings and 
other foreign actors, even exploited this national crisis to steal 
billions from taxpayers.
  The exact amount of unemployment fraud resulting from the pandemic is 
not known. Estimates are wide-ranging with some encompassing only 
improper payments due to fraud, and others focused on all improper 
payments, including those resulting from administrative error.
  The Government Accountability Office found at least $60 billion in 
fraud as they testified before our committee. However, according to 
recent testimony from the Department of Labor Inspector General, 
improper payments and pandemic unemployment programs have saddled 
taxpayers with at least $191 billion in fraud, as was testified before 
our committee. Some experts suggest this number could be as high as 
$400 billion.
  New York alone is estimated to have paid as much as $11 billion in 
fraudulent unemployment benefits since March 2020. On top of all of 
this, New York has an outstanding trust fund loan of nearly $8 billion, 
which it has yet to repay.
  Because of New York's gross mismanagement, taxpayers and small 
businesses must now make up the difference. After all the hardships 
they have endured over the past several years, how can it possibly be 
fair to ask them to pick up the tab for the government's negligence and 
incompetence?
  Now, under House Republicans and the leadership of Jason Smith, 
Congress is finally taking steps to recover these valuable taxpayer 
dollars.
  Mr. Speaker, I urge support for this bill from all of my colleagues.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield 1 minute to the gentleman 
from Oregon (Mr. Blumenauer).

                              {time}  1500

  Mr. BLUMENAUER. Mr. Speaker, I am having flashbacks in terms of what 
we were facing in 2020. Every member of my office was working to try 
and deal with panicked people who couldn't get through to get their 
unemployment in a system that was bogged down, 600 percent increase.
  Now, we are taking up legislation that would cut fraud-fighting 
dollars and hold hardworking Americans liable for overpayments that 
were not necessarily their fault. Families would be forced to repay 
these funds up to 10 years later. Even the Congressional Budget Office 
has said there is uncertainty about how much would be recovered.
  I was in the middle of that. I saw the panic, the challenge, and 
despair. I think it would be far better to take advantage of extending 
the statute of limitations so we make sure we can claw it back. But 
don't punish people who may be caught up in this net that was not of 
their making.
  I strongly urge that we reject this, that we deal with ways to 
increase the statute of limitations and recover the money that needs to 
be recovered.
  Mr. SMITH of Missouri. Mr. Speaker, I yield myself such time as I may 
consume.
  My colleagues on the other side have noted their objection to this 
bill's rescission of unobligated COVID funds sitting unused at the 
Department of Labor. They claim these funds are important in combating 
UI fraud, but the reality couldn't be further from the truth.
  Mr. Speaker, I include in the Record a February letter from the 
Missouri Department of Labor and Industrial Relations.

                                               Department of Labor


                                       & Industrial Relations,

                             Jefferson City, MO, February 6, 2023.
     Hon. Jason Smith,
     Chair, House Ways and Means Committee, Washington, DC.
       Dear Chairman Smith: Thank you for the opportunity to share 
     the Missouri Department of Labor & Industrial Relations, 
     Division of Employment Security's experience in administering 
     and combatting fraud in the unemployment insurance (UI) and 
     federal CARES Act programs throughout the duration of the 
     COVID-19 pandemic.
       Missouri's Governor declared a state of emergency on March 
     13, 2020, and Missouri entered into an agreement with the 
     United States Department of Labor (USDOL) to administer the 
     federal CARES Act program on March 28, 2020. In a span of 
     only three weeks, Missouri realized an increase of over 3000% 
     in unemployment insurance claims. In addition to the historic 
     increase in workload, the combination of state and new 
     federal programs expanding eligibility and dramatically 
     increasing monetary benefits, rapidly evolving federal 
     guidance, rampant media coverage, and misinformation made for 
     an extremely challenging environment for program 
     administration.
       Federal programs, such as Pandemic Unemployment Assistance 
     (PUA), initially only required self-attestation to qualify 
     and allowed individuals to backdate their PUA claims, lacked 
     the checks and balances inherent within the state's regular 
     Unemployment Insurance program that are a key component of 
     program integrity. Additionally, eligibility for a single 
     dollar of benefit under any unemployment program 
     automatically qualified the individual to receive a 
     substantial supplemental Federal Pandemic Unemployment 
     Compensation (FPUC) payment, inviting and incentivizing 
     individuals and bad actors to attempt to collect benefits to 
     which they were not entitled. Constantly changing guidance 
     for the CARES Act programs added to the burden by creating 
     additional workloads, complexity and confusion. For example, 
     PUA guidance from the USDOL was amended four times in a 
     period of less than 6 months, and much of the amended 
     guidance applied retroactively to the beginning of the 
     pandemic assistance period for claims already processed.
       Fortunately, in 2016 Missouri replaced its legacy mainframe 
     system with a modernized unemployment insurance application. 
     Prior to the pandemic, Missouri had existing identity 
     verification and fraud detection tools in place. This gave 
     Missouri the ability to address the CARES Act program 
     implementation challenges and successfully identify potential 
     threats and prevent both small and large-scale fraud attacks 
     that plagued some states, with nationwide estimates of 
     potential fraud overpayments exceeding $45 billion according 
     to the USDOL--Office of Inspector General (OIG). However, in 
     response to unprecedented fraud attacks, Missouri 
     continuously reviewed and modified its fraud detection tools 
     and methods. As a result, funding administered by the USDOL 
     for improved program integrity was mostly leveraged for the 
     provision of additional staffing resources to address the 
     increased volume of work and support enhancement of the 
     existing technologies.
       More recent funding opportunities, such as the Equity and 
     Tiger Teams grants, provide limited flexibility to address 
     program integrity and ongoing fraud prevention strategies. 
     The Equity Grant is focused on improving recipiency and 
     equitable access to the UI program. The Tiger Teams grant 
     identifies three focus areas to be addressed, ``equity and 
     access, backlogs and timeliness, and integrity.'' Bad actors 
     are constantly striving to find new innovative ways to 
     defraud benefit programs and avoid detection. As such, 
     Missouri must continue to innovate and invest in fraud 
     prevention strategies and tools that prevent our states and 
     our citizens from becoming the next victims. The existing 
     use, at the federal level, of the Resource Justification 
     Model for funding UI administration and one-time grant 
     opportunities, fall short in meeting this need. Therefore, 
     prioritization should be given to consistent funding that not 
     only permits states to implement proven strategies and tools 
     to combat fraud but also provides states the ability to 
     support and maintain these solutions into the future.
       Missouri will continue to place UI program integrity as a 
     critical priority. I appreciate this opportunity to share 
     Missouri's experience with the challenges we faced 
     administering the federal programs throughout the pandemic.
           Sincerely,
                                                      Anna S. Hui,
                                              Department Director.

  Mr. SMITH of Missouri. In it, my State's workforce directory notes 
their experience with tiger teams.
  It says: ``More recent funding opportunities, such as the equity and 
tiger team grants, provide limited flexibility to address program 
integrity and ongoing fraud prevention strategies.''

[[Page H2288]]

  This doesn't sound like a glowing review.
  I welcome Democrats to share any information that they have that the 
Department of Labor's efforts have helped us recover dollars for 
American taxpayers.
  Mr. Speaker, I yield 3 minutes to the gentleman from Kansas (Mr. 
Estes).
  Mr. ESTES. Mr. Speaker, I rise today in support of the Protecting 
Taxpayers and Victims of Unemployment Fraud Act.
  Right now, our Federal Government is borrowing one out of $5 we 
spend, over $45,000 a second. This fact alone should outrage every 
American.
  Yet, we face another outrageous problem here in the swamp: Waste, 
fraud, and abuse. Not only are we borrowing at historic rates, but we 
are borrowing to cover the costs of rampant fraud that exists 
frequently unchecked in our system.
  This was magnified during the height of the COVID-19 pandemic. While 
there were good reasons to expand unemployment benefits when many 
Americans were displaced from work through no fault of their own, we 
are already 3 years removed from the passage of the CARES Act.
  The pandemic emergency declaration is over; not because the Biden 
administration followed the science and voluntarily gave up their 
emergency powers, but because House Republicans and the Senate came 
together to force the Biden administration to end the pandemic 
emergency declaration.
  One troubling data point that has emerged is the unemployment claims 
as a percentage of unemployed workers. This was 37 percent in February 
2020, right before the pandemic came to our shores. Yet, by August of 
the same year, it had climbed to 216 percent.
  The data is clear, we were paying massive amounts of unemployment to 
people who were not unemployed. It is estimated that of the $873 
billion in total pandemic UI benefits disbursed, about $357 billion 
went to fraudulent claims.
  No Member of Congress should be comfortable telling their 
constituents that they don't care about wasting nearly $400 billion of 
taxpayer money.
  In my home State, a forensic audit found that the State of Kansas 
paid up to $466 million in unemployment fraud. While this massive fraud 
was occurring, hardworking, unemployed Kansans were competing with 
fraudsters to receive the unemployment benefits they deserved and so 
desperately needed.
  In my office in Wichita, we received countless calls from Kansans who 
were trying to reach an ineffective Kansas Department of Labor.
  One constituent waited over half a year after her claim mysteriously 
ended up in the fraud department. Others reached out to let me know 
they had been victims of fraud, some receiving a 1099 claiming they 
owed taxes on benefits that somebody else received.
  These cases point to a real problem in Kansas and across the country. 
Taxpayers lost out to fraudsters who used the pandemic, vast sums of 
Federal Funds and weak State leadership to game the system.
  Thankfully, there is a solution that protects the taxpayers and reins 
in the fraud we have seen in unemployment insurance. The Protecting 
Taxpayers and Victims of Unemployment Fraud Act won't make everybody 
whole, but it ensures that some of the hundreds of billions of dollars 
are recouped, and it lets States keep 25 percent of those funds so they 
can improve their own unemployment insurance systems.
  To be clear, unemployment is a critical lifeline that helps Americans 
during a challenging time. When bad actors abuse the program, it hurts 
those who actually need it by taking away monetary and human resources.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. SMITH of Missouri. Mr. Speaker, I yield an additional 30 seconds 
to the gentleman from Kansas.
  Mr. ESTES. The bill is the right and fair approach to ensure 
unemployed Americans have full access to the assistance they need and, 
when done correctly, encourages those individuals to get back into the 
workforce.
  Tackling waste, fraud, and abuse in unemployment insurance shouldn't 
be a partisan issue. It rights a wrong and is just common sense.
  Mr. Speaker, I encourage my colleagues to join me in this commonsense 
legislation that puts taxpayers first.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield 1 minute to the gentleman 
from New Jersey (Mr. Pascrell).
  Mr. PASCRELL. Mr. Speaker, the other side, respectfully, Republicans, 
created a once-in-a-century crisis, once in a century. They are holding 
this sham debate to distract us.
  In 2021, Democrats passed the American Rescue Plan. It had a very 
strong fraud protection section. I hope you read it. Our unemployment 
aid was a gigantic success, by the way. It kept families together and 
it saved lives.
  Republicans claim to care about misuse, but when we passed real fraud 
protections, every single one of you voted ``no.'' That is the record. 
It is clear.
  House Republicans are harboring a disgraced fraudster who was just 
arrested on unemployment fraud. You cannot make this up.
  We are prosecuting fraud. States recovered over $100 million. 
Enforcement is working. This is not about fraud or about saving money.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Members are reminded to direct their remarks to the Chair.
  Mr. PASCRELL. Mr. Speaker, you took the rest of my time.
  The SPEAKER pro tempore. The gentleman's time has expired.
  Mr. PASCRELL. Sir, you took the rest of my time.
  The SPEAKER pro tempore. The gentleman's time has expired.

  Mr. SMITH of Missouri. Mr. Speaker, I yield 1\1/2\ minutes to the 
gentlewoman from California (Mrs. Steel).
  Mrs. STEEL. Mr. Chairman, as we all now know, pandemic unemployment 
assistance funds became the source of the greatest theft of taxpayer 
dollars in American history.
  Estimates put the total amount of assistance lost to fraud as high as 
$400 billion. California alone lost around $60 billion under the 
leadership of President Biden's Secretary of Labor nominee Julie Su.
  As Californians in particular continue struggling under spiking 
prices and high taxes, it is absurd to force them to foot the bill for 
fraud committed while their leaders were asleep at the wheel.
  That is why I am proud to support the Protecting Taxpayers and 
Victims of Unemployment Fraud Act, which will address this 
unprecedented theft by incentivizing States to recover these stolen 
funds and providing the tools to prevent future fraud.
  Government caused this problem, and it owes the American taxpayers a 
solution. I urge all my colleagues to vote ``yes'' on this measure to 
provide the fiscal oversight we were sent here to deliver.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield 1 minute to the gentleman 
from Pennsylvania (Mr. Evans).
  Mr. EVANS. Mr. Speaker, this bill is not about addressing fraud. My 
home State of Pennsylvania is already fighting fraud with the American 
Rescue Plan funds that support new positions at American Job Centers.
  This bill targets innocent workers who have no idea that their State 
made mistakes in paying their unemployment benefits.
  This bill targets innocent workers whose emergency benefits kept 
their households afloat.
  The bill targets innocent workers who went back to work as soon as 
they could and often for lower pay.
  I urge my colleagues to let States focus on real fraud and protect 
innocent workers by voting against this bill.
  Mr. SMITH of Missouri. Mr. Speaker, I yield 1\1/2\ minutes to the 
gentleman from Ohio (Mr. Carey).
  Mr. CAREY. Mr. Speaker, I rise in support of H.R. 1163.
  Our jobs recovery has been hampered by bloated COVID relief benefits 
that paid people more not to work, while criminals and fraudsters were 
lining their pockets with billions in taxpayer funds from expanded UI 
programs.
  We are not talking about everyday fraud or administrative error. We 
are talking about fraud that was committed with intent, both 
domestically and by foreign nation-state actors that, frankly, used 
COVID relief to conduct economic warfare against American citizens and 
put our national security at risk.

[[Page H2289]]

  In my home State of Ohio, it was estimated that $1 billion may have 
been paid in fraudulent unemployment from March of 2020 to June of 
2022.
  Now, my friends on the other side are arguing against this bill and 
the administration has just released a Statement of Administration 
Policy opposing this bill.
  The fact is, the President's Fiscal Year 2024 budget request includes 
several of the very same fraud recovery and prevention measures that my 
colleagues across the aisle are railing against today. Three of the 
proposals in the President's budget are nearly identical:
  Allowing States to keep 5 percent of recovered overpayments and 
reinvest those dollars in program integrity and fraud prevention;
  Matching unemployment claims data against the National Directory of 
New Hires to verify when somebody that is receiving unemployment 
becomes employed; and
  Extending the statute of limitations for criminal charges and civil 
actions for prosecuting fraud from 5 to 10 years.
  After declaring that ``the watchdogs are back'' in his first State of 
the Union, it has taken the President nearly 2 years to finally embrace 
the antifraud policies that we Republicans are calling for today.
  Were the President to veto this bill, he would be vetoing the very 
same policies he endorsed.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield 1 minute to the gentleman 
from Illinois (Mr. Schneider), my home State.
  Mr. SCHNEIDER. Mr. Speaker, we all share the goal of fighting fraud. 
As my colleague just said, there are things that we can and do agree 
on, but this bill isn't that.
  Our focus should be on going after those who stole unemployment 
insurance money and fixing the broken systems that enable them.
  Instead, the Republicans' bill seeks to claw back funds included in 
the American Rescue Plan that would allow the States to do what we are 
asking today.
  Mr. Smith's bill will make it easier for the bad guys to cheat the 
system, not harder, and it will hurt the hardworking, law-abiding 
citizens.

  Countless honest taxpayers hit hard by the pandemic followed the 
rules of their State, received their benefits, and used those funds to 
pay for their children's healthcare, to pay their rent, and simply to 
make ends meet. They had no way of knowing the State had mistakenly 
overpaid them.
  During the markup, I asked Chairman Smith what protections were 
included in this bill to ensure that honest taxpayers didn't get 
surprise bills or face prosecution from States.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield an additional 30 seconds 
to the gentleman from Illinois.
  Mr. SCHNEIDER. During the markup, I asked what protections were in 
place to protect those honest taxpayers. Neither the Chair nor any of 
my Republican colleagues could point to any protections.
  While both sides of the aisle care about fighting fraud--and I know 
we do--this bill makes clear that only Democrats care about protecting 
hardworking, honest Americans from receiving surprise bills and being 
treated like criminals.
  Mr. SMITH of Missouri. Mr. Speaker, I yield 2 minutes to the 
gentleman from Utah (Mr. Moore).
  Mr. MOORE of Utah. Mr. Speaker, I rise today in support of H.R. 1163, 
the Protecting Taxpayers and Victims of Unemployment Fraud Act, which 
addresses the urgent need to safeguard taxpayer dollars from 
unemployment insurance fraud schemes.
  One of our most crucial oversight duties is to ensure the responsible 
use of taxpayer funds. Recent reports from the White House, GAO, the 
Department of Labor, and other organizations have exposed the alarming 
theft of up to $400 billion in taxpayer dollars due to unemployment 
insurance fraud during the COVID pandemic.

                              {time}  1515

  This revelation demands immediate action. What we are trying to 
accomplish here is to show a plan that is feasible to be able to go 
after this fraud.
  My colleagues on the other side of the aisle talk about wanting to go 
after fraud, too. These arguments that we are talking about are missing 
the point. This bill will go after the fraud that took place. We 
introduced H.R. 1163, and it will help enable the recovery of lost 
dollars, ensuring that this stolen money is reclaimed.
  While fraud has been widespread across this Nation, some States have 
demonstrated success in minimizing these losses. In Utah, my home 
State, overpayment due to fraud consisted of less than 1 percent of 
total benefits disbursed. I am proud of this.
  Our leaders in Utah have done an excellent job managing and 
protecting these resources thanks to the systems and processes 
implemented by former Governor Herbert, Governor Cox, their 
administrations, and the Utah State legislature.
  The Federal Government must now work to restore public trust. It 
starts with holding bad actors accountable. This bill will enable that 
by strengthening the integrity of our systems for the future and 
encourage States to be proactive rather than reactive.
  Mr. Speaker, I urge my colleagues to support this fiscally 
responsible bill.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield 1 minute to the 
gentlewoman from Texas (Ms. Jackson Lee).
  Ms. JACKSON LEE. Mr. Speaker, let me say that I believe in border 
security at the southern border. I also believe in the fact that we are 
a land of immigrants, as well as a land of laws.
  Here we have two bad bills that don't fix the immigration and border 
security problem, and in this bill, we are not fixing any problem with 
fraud.
  Let me explain to my colleagues and also the American people: This 
takes away $400 million that we use to eliminate fraud. How does that 
work, in H.R. 1163? This bill is to claw back funds that people 
allegedly received accidentally.
  This is what will happen. Let me tell you what they are going to do. 
They are going to make sure that law enforcement and first responders, 
who were out in public during the pandemic every day, will receive a 
bill because they accidentally received an overpay.
  I had an amendment to exempt law enforcement which was rejected. They 
wouldn't take that amendment. We are, in fact, coming upon National 
Police Week next week when we honor and memorialize law enforcement.
  They wouldn't take the amendment to exempt firefighters. I saw them 
out in the community when I was out in my district, testing, 
administering vaccinations, tending to people in crisis during the 
pandemic. They were out in our communities.
  Additionally, they wouldn't take an exemption of schoolteachers. This 
is a bad bill. Why are you punishing our law enforcement, first 
responders, fire fighters, teachers, and others?
  Let us take this bill off the table and go back to the drawing board. 
We are losing. We are not gaining.
  Mr. Speaker, I am here today to reassert my opposition to the 
proposed legislation H.R. 1163--Protecting Taxpayers and Victims of 
Unemployment Fraud Act, and to again assert the need for strong 
reconsideration for the harm and damage this bill will do to the 
American people.
  H.R. 1163, the Protecting Taxpayers and Victims of Unemployment Fraud 
Act, quite simply a harmful bill that would strip state Unemployment 
Insurance (UI) programs of essential resources to fight fraud, combat 
identity theft, and recover overpayments, and would set back the goals 
of strengthening program integrity and combating systemic fraud.
  H.R. 1163 would undermine the integrity of the UI system and allow 
states to send surprise bills to workers for overpayments of 
unemployment benefits paid during the pandemic as long as 10 years 
after the overpayment occurred.
  This bill takes no consideration into the fact that the overpayments 
were made to workers who did nothing wrong, did not know they were 
overpaid, spent the money on necessities, and returned to work as soon 
as they could. Workers did not know they were overpaid at the time (and 
will not know until they receive a surprise bill).
  This ``anti-fraud'' legislation would do more harm than good, 
penalizing America's essential workers who did nothing wrong while 
slashing funding from programs holding criminals accountable.
  It makes no sense that we would not do everything we can to protect 
special populations of workers and continue to support them as 
essential workers--as those who hold the fabric of our communities 
together, especially in our most desperate and fragile times of need.

[[Page H2290]]

  In fact, I along with my colleagues have attempted to address many of 
the ills this bill purports by offering common sense amendments that 
Republicans have continued to refuse any meaningful consideration.
  My first amendment for H.R. 1163, listed on the Rules Committee 
roster as Amendment No. 41, would have required states to waive 
overpayments of pandemic unemployment benefits that were made to law 
enforcement personnel and security in 2020 or 2021 who were without 
fault in the UI overpayments.
  My second amendment for H.R. 1163, listed on the Rules Committee 
roster as Amendment No. 42, would have required states to waive 
overpayments of pandemic unemployment benefits that were made to 
firefighters and emergency personnel in 2020 or 2021 who were without 
fault in the UI overpayments.
  And my third amendment for H.R. 1163, listed on the Rules Committee 
roster as Amendment No. 43, would have delayed enactment until the 
Secretary certifies that no provision would result in school 
personnel--including teachers and support staff--in 2020 or 2021 
without fault in the UI overpayment would be forced to repay 
overpayments due to state error.
  These are common-sense amendments that have been repeatedly 
disregarded by my colleagues across the aisle who have instead chosen 
to put forward legislative attacks on our most vulnerable populations.
  It is time we stop the negativity and counterproductive efforts that 
are ripping apart our country, and to instead focus on coining together 
to work towards sensible and effective solutions that can work for the 
betterment and growth of our country.
  This bill is largely opposed by Americans who see right through the 
misguided language purporting to go after fraud but really goes after 
hardworking American citizens.
  In my home state of Texas and across the country labor unions have 
reached out to urge a no vote on this bill and I stand with them in 
strong opposition to this wayward measure.
  Mr. SMITH of Missouri. Mr. Speaker, I yield 1\1/2\ minutes to the 
gentleman from North Carolina (Mr. Murphy).
  Mr. MURPHY. Mr. Speaker, I rise today in strong support of H.R. 1163, 
the Protecting Taxpayers and Victims of Unemployment Fraud Act.
  During the COVID-19 pandemic, we saw the words ``unprecedented'' 
many, many times. Today we stand at an unprecedented crime scene.
  During the course of the pandemic, the American taxpayers were 
subjected to one of the greatest heists ever committed, to the tune of 
about $191 billion in improper unemployment payments.
  My colleague across the aisle said: Yeah, they received the money 
accidentally. Well, if I walk up across the street and find a $20 bill 
accidentally dropped by someone else, do I not owe that money back to 
them? Is it mine to keep? No, it is not. It is to be given back. This 
is what was done from payments to the American taxpayers who did not 
deserve the money.
  Of course, the spending spree by the Biden administration wants to 
continue by adding ballooning debt to our national deficit.
  Today, House Republicans are presenting a solution to this 
unprecedented problem. We are not raising taxes or spending our 
grandchildren's money. We are merely asking for money back that was not 
owed to those people.
  It is simple. Why not reclaim the billions of dollars in improper 
payments before spending another cent of taxpayer money? Even 
schoolchildren would understand what is at issue.
  It is past time to rectify this disaster and hold those accountable 
who got money that they did not deserve.
  Mr. Speaker, I urge my colleagues to support this bill.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield 1 minute to the gentleman 
from Illinois (Mr. Foster).
  Mr. FOSTER. Mr. Speaker, as Congress' physicist and computer chip 
designer, I rise to make this simple point, that the massive levels of 
UI fraud and identity fraud generally did not happen in countries that 
have a secure and trusted digital ID system.
  This is well known to residents of many States as the mobile ID, or 
digital driver's license, that allows a REAL ID compliant driver's 
license to be placed under your smartphone and to use the unique 
hardware ID of your phone and its biometric login capabilities to prove 
that you are who you say you are online or in person and to prevent 
anyone from impersonating you.
  Last session of Congress, we came within a whisker of getting it 
included in the omnibus, that the Federal Government should start 
recognizing this proven form of digital ID.
  Unfortunately, H.R. 1163 is a bill that is designed to fail in the 
Senate. If we start working with our Senate colleagues, I think we have 
a chance of making real progress on this.
  Mr. SMITH of Missouri. Mr. Speaker, I reserve the balance of my time.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield 1 minute to the gentleman 
from Virginia (Mr. Beyer).
  Mr. BEYER. Mr. Speaker, I stand in opposition to this bill. It is 
nothing more than a disingenuous attempt to undermine the Federal 
unemployment insurance program, which provided a critical lifeline to 
millions of Americans during the pandemic.
  My Republican colleagues say they are concerned about unemployment 
fraud. I am, too.
  However, this bill does nothing to claw back stolen UI funds. In 
fact, it would go a long way toward stopping the ongoing successful 
work by the Federal Government to fight fraud and hold criminals 
responsible.
  It would rescind $2 billion in funding provided to the Department of 
Labor to strengthen the UI system and improve fraud detection and 
prevention and replace it with a bizarre set of incentives for States 
to go after ordinary workers who were overpaid, through no fault of 
their own, years after the fact.
  The Department of Labor assistance facilitated by the American Rescue 
Plan made a huge difference in my State of Virginia. Following the 
guidance, we were able to make a significant dent in the unemployment 
insurance appeals backlog that has plagued our State system for years.
  There is no question our unemployment system needs improvement, but 
this bill would make the system more vulnerable to fraud.
  Mr. SMITH of Missouri. Mr. Speaker, I yield 1\1/2\ minutes to the 
gentlewoman from New York (Ms. Malliotakis).
  Ms. MALLIOTAKIS. Mr. Speaker, since House Republicans have been in 
control, we have brought transparency to the people's House. We are the 
ones who are protecting taxpayers. We are the ones exposing waste, 
fraud, and abuse, including as high as $400 billion in COVID relief and 
unemployment fraud.
  Sadly, my home State of New York ranks near the top of the list, with 
an estimated $11 billion in this fraudulent unemployment benefits. 
These taxpayer dollars went to fraudsters, many overseas, as far as 
China, Russia, and Nigeria. They even went to dead people.
  They spent it on Rolex watches, fancy furnishings, and designer goods 
at Louis Vuitton, Chanel, Burberry, Gucci; $10 million on a villa in 
the Dominican Republic; $3.5 million on a mansion in New Jersey; a 
charter jet to get the fraudster who purchased it to and from; 
Porsches, Ferraris, Bentleys, BMWs, and Mercedes Benz. One person even 
received $1.5 million over a span of 10 months.
  Meanwhile, my district offices in Staten Island and Brooklyn had to 
help dozens of constituents who had their identities stolen and could 
not get the unemployment benefits they desperately needed.
  New York had to take an $8 billion loan from the Federal Government, 
which it has not paid back yet, by the way, to cover all of this. Now, 
our small businesses are paying the price with higher 
unemployment assessments.

  The bottom line is, this bill would help crack down on this type of 
fraud, would give law enforcement the statute of limitations it needs 
for criminal charges or civil actions, incentivizes States to help us 
crack down and recover these fraudulent payments, and stops 
unemployment insurance payments to incarcerated and deceased people.
  Mr. Speaker, I don't know how anyone can't support this bill. Thank 
you.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield 1 minute to the gentleman 
from Nevada (Mr. Horsford).
  Mr. HORSFORD. Mr. Speaker, I thank the distinguished ranking member 
of the House Ways and Means Work and Welfare subcommittee for the time.
  Mr. Speaker, this bill, the surprise billing our workers act, is 
another extreme MAGA attempt that threatens to punish hardworking 
constituents whom, at no fault of their own, may have been overpaid 
unemployment insurance benefits.

[[Page H2291]]

  If deficiencies and errors on the part of the unemployment 
authorities in each State caused an overpayment, this bill would allow 
the government to go after those funds for up to 10 years.
  Imagine that. Constituents in my district in North Las Vegas, who 
have been working hard, paying their bills, and taking care of their 
families, suddenly get a surprise bill that says that they owe hundreds 
or even thousands of dollars.
  On top of that, you want to go after fraudulent people gaming the 
system. We have laws and resources in place to go after networks and 
individuals who purposely try to get money that they are not entitled 
to.
  Just look at the Member from the other side of the aisle who was 
indicted yesterday for unemployment fraud, among other things.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield an additional 1 minute to 
the gentleman from Nevada.
  Mr. HORSFORD. Mr. Speaker, last Congress, I introduced the 
Unemployment Insurance Technology Modernization Act, which would 
prevent fraud and address the technical shortcomings of many State 
unemployment programs. I would ask my colleagues on the other side of 
the aisle to work with me and other colleagues to actually provide 
solutions.
  Stop targeting our constituents. Let's go after the corporate cartels 
that are involved in this fraud of our unemployment insurance, but 
let's protect the unemployment program, which is a bridge to people who 
need it. My constituents faced the second highest unemployment during 
the pandemic. I will fight for them every step of the way.
  Mr. SMITH of Missouri. Mr. Speaker, I yield myself such time as I may 
consume.
  Democrats are falsely claiming that this bill claws back relief funds 
from Americans who received an overpayment through no fault of their 
own.
  The language in this bill is crystal clear. It is focused on 
recovering overpayments due to fraud. That means intent on the part of 
the individual. Existing law already protects individuals who receive 
overpayments through administrative error or otherwise. In fact, 
section 2401 of the CARES Act allows States to waive overpayments on a 
case-by-case basis if the payment would be contrary to equity and good 
conscience.
  This bill also explicitly states in section 2(a)(2) and section 
2(a)(3) that ``the State agency may retain 25 percent of any amount 
recovered from overpayments of pandemic emergency unemployment 
compensation''--this is the one you need to understand--``that were 
determined to be made due to fraud.'' Not overpayment. Due to fraud.
  Mr. Speaker, I reserve the balance of my time.
  Mr. DAVIS of Illinois. Mr. Speaker, may I inquire as to how much time 
is remaining?
  The SPEAKER pro tempore. The gentleman from Illinois has 14 minutes 
remaining. The gentleman from Missouri has 3\1/2\ minutes remaining.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield 1 minute to the 
gentlewoman from California (Ms. Kamlager-Dove).
  Ms. KAMLAGER-DOVE. Mr. Speaker, I rise to condemn Republicans' attack 
on our workers. The GOP's surprise billing our workers act would allow 
States to send surprise bills to workers for unemployment benefits 
overcompensation paid to them during the pandemic for as long as 10 
years after the overpayment was issued.
  Is it the job of the American people to keep the receipts of 10 years 
past of UI payments so that they don't go to jail?
  People who applied for these benefits and were overpaid did not know 
they had been overpaid. These were the result of a government mistake.
  To add salt to the wound, Republicans want to cut fraud prevention 
programs by $400 million over the next 5 years. Unbelievable.
  This legislation hurts our State employee unions by allowing States 
to contract out jobs, which is what led to this mess in the first 
place.
  Let's be clear: This is an old trope from the Republican playbook. 
Blame and demonize poor and Black women, insinuating they are gaming 
the system, when Republicans have their own welfare queen to deal with.
  How can you possibly lecture Americans about paying their bills when 
you fail time and time again to come together and meet your financial 
obligations as a country?

                              {time}  1530

  Mr. SMITH of Missouri. Mr. Speaker, I yield 1\1/2\ minutes to the 
gentleman from Indiana (Mr. Yakym).
  Mr. YAKYM. Mr. Speaker, I rise today in strong support of H.R. 1163, 
the Protecting Taxpayers and Victims of Unemployment Fraud Act.
  The Department of Labor's inspector general pegs pandemic-era 
unemployment insurance fraud at $191 billion, though other experts say 
it could run as high as $400 billion. These are staggering figures.
  This fraud enriched criminals. It harmed innocent Americans who faced 
processing delays, stolen benefits, and stolen identities. These were 
not victimless crimes.
  H.R. 1163 takes a couple of important and commonsense steps toward 
addressing this fraud.
  First, it extends the statute of limitations so that we can continue 
to investigate reports, recover taxpayer dollars, and prosecute the 
fraudsters.
  More importantly, it incentivizes States not just to recover 
fraudulent payments but to shore up their systems against future fraud 
by allowing them to use a portion of recovered funds for program 
integrity and fraud prevention efforts.
  The unemployment insurance program is an important part of our safety 
net that helps Americans recover from a job loss. The pandemic exposed 
major flaws that are in desperate need of attention.
  I support the bill before us today because we shouldn't just catch 
the fraud that was. We need to stop the fraud that will be. H.R. 1163 
takes steps to ensure that we in Congress and Americans across the 
country have faith in this program to deliver during difficult times.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield 1 minute to the 
gentlewoman from California (Ms. Chu).
  Ms. CHU. Mr. Speaker, I rise in opposition to this surprise billing 
our workers act.
  This bill would harass workers with surprise bills for unemployment 
benefits that were overpaid due to State errors. These workers, many of 
whom worked long hours for low wages, rightfully used these benefits on 
basic needs, such as utilities, rent, and groceries, with no way of 
knowing that there was a mistake.
  State agencies were simply not equipped to expeditiously get out 
pandemic unemployment benefits, resulting in a number of overpayments 
to workers who filled out their applications honestly in States led by 
Governors of both parties.
  There is no denying that there were wrongdoers who exploited the 
emergency programs set up by Congress to assist American workers. 
However, this is not an excuse to go after honest Americans who did 
nothing wrong.
  Mr. Speaker, I urge my colleagues to vote ``no'' on this bill.
  Mr. SMITH of Missouri. Mr. Speaker, I reserve the balance of my time.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield 2 minutes to the 
gentlewoman from Ohio (Mrs. Sykes).
  Mrs. SYKES. Mr. Speaker, before I joined Congress, I was a State 
representative in the great State of Ohio. During the pandemic, my 
office fielded hundreds if not thousands of calls from parents, 
seniors, veterans, farmers, and families, all who needed help, and we 
did.
  Unbeknownst to my constituents, the IT systems at the State agencies 
in Ohio processed those claims. Those IT systems needed to be updated. 
The staff roles had been decimated and protections were not in place. 
Months after those families sighed a breath of relief, they received a 
letter demanding repayment.
  Mr. Speaker, if you have never been on the other end of a phone call 
where someone has cried or wailed in fear of financial ruin or about 
how they are going to feed their families or pay their bills or get 
their medication, I can understand why you would vote for this bill. 
Unfortunately, Mr. Speaker, I have, and I cannot support this 
legislation.
  Mr. Speaker, I understand the need to stop fraud, and I understand 
the need to do this work. I look forward to doing it with you someday, 
but this

[[Page H2292]]

bill would not do it. In fact, it actually eliminates $2 billion of the 
funds to update the system that caused this problem and put my 
constituents in this situation in the first place.
  Mr. Speaker, I was sent here to fight for families, to lower costs--
not to criminalize Americans--and to support them with bills that will 
help their families live the American Dream.
  Mr. Speaker, I will offer a motion to recommit H.R. 1163, and I ask 
unanimous consent to add the text of this amendment into the Record 
immediately prior to the vote on the motion to recommit.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from Ohio?
  There was no objection.
  Mr. SMITH of Missouri. Mr. Speaker, I am prepared to close, and I 
reserve the balance of my time.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield myself the balance of my 
time.
  Mr. Speaker, Democrats strongly agree that those who took advantage 
of the COVID crisis to commit fraud must be held accountable. That is 
why Democrats put $2 billion in the American Rescue Plan Act to fight 
fraud. Every House Republican voted against it.
  According to the Department of Labor's trust fund, only 16 States met 
the required solvency standard for unemployment systems. Instead of 
punishing organized crime and instead of addressing the fragility of 
State unemployment systems, the Republican H.R. 1163 guts Federal 
funding to fight fraud, weakens State unemployment systems, privatizes 
American public service jobs, and claws back overpayments for workers 
who were unemployed during the pandemic and received overpayments 
through no fault of their own.
  Mr. Speaker, I am shocked that the Republican leadership is advancing 
this bill that guts Federal investment in stopping unemployment fraud 
the same week when one of its own is indicted for such crimes.
  Mr. Speaker, I urge my colleagues to oppose this bill that punishes 
America's families while stunting accountability for actual crimes.
  Mr. Speaker, I urge a ``no'' vote, and I yield back the balance of my 
time.

  Mr. SMITH of Missouri. Mr. Speaker, I yield myself the balance of my 
time.
  The only way that this bill punishes American families are American 
families who are fraudsters, American families who intentionally create 
and commit fraud. Give me a break.
  After years of inaction when Democrats held the majority, taxpayers 
have lost anywhere from $191 billion upward to $400 billion in fraud, 
and their identities have been stolen.
  Democrats ignored it. They blocked it, and they shot down commonsense 
safeguards. Guess what? They refused to hold even one hearing on fraud.
  American workers, families, and small businesses are already dealing 
with a cost-of-living crisis, and they deserve better. That is why they 
elected a Republican majority on the promise of a government that is 
accountable.
  Today's bill delivers on that accountability with commonsense reforms 
that empower the States to make things right. With this vote, we will 
end the greatest theft of taxpayer dollars in American history.
  Mr. Speaker, I urge my colleagues on both sides of the aisle to do 
the right thing and vote in favor of this bill and against fraud.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. All time for debate has expired.
  Pursuant to House Resolution 383, the previous question is ordered on 
the bill, as amended.
  The question is on the engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


                           Motion to Recommit

  Mrs. SYKES. Mr. Speaker, I have a motion to recommit at the desk.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mrs. Sykes of Ohio moves to recommit the bill H.R. 1163 to 
     the Committee on Ways and Means.

  The material previously referred to by Mrs. Sykes is as follows:

       Mrs. Skyes moves to recommit the bill H.R. 1163 to the 
     Committee on Ways and Means with instructions to report the 
     same back to the House forthwith, with the following 
     amendment:
       In section 2(a)(2), strike ``(f)(3)'' each place it appears 
     and insert ``(f)''.
       In section 2(a)(2), redesignate subparagraphs (A) and (B) 
     as subparagraphs (D) and (E), respectively, and insert the 
     following:
       (A) in subparagraph (2), by striking ``In'' and inserting 
     ``Subject to paragraph (3), in'';
       (B) by redesignating paragraphs (3) and (4) as paragraphs 
     (4) and (5), respectively;
       (C) by inserting the following:
       ``(3) Waiver for certain individuals.--In the case of 
     individuals who have received amounts of Federal Pandemic 
     Unemployment Compensation or Mixed Earner Unemployment 
     Compensation under this section to which they were not 
     entitled, the State may not require such individuals to repay 
     the amounts of such pandemic unemployment assistance to the 
     State agency if--
       ``(A) the State agency determines that the payment of such 
     Federal Pandemic Unemployment Compensation or Mixed Earner 
     Unemployment Compensation was without fault on the part of 
     any such individual, and
       ``(B) such individual--
       ``(i) is a worker age 60 or older who is receiving benefits 
     under title II of the Social Security Act (42 U.S.C. 401 et 
     seq.);
       ``(ii) is a veteran, as such term is defined in section 101 
     of title 38, United States Code; or
       ``(iii) was working in health care (including as a provider 
     or support staff) in 2020 or 2021.'';
       In section 2(a)(2)(D), as redesignated, strike 
     ``subparagraph (A)'' and insert ``paragraph (4)(A), as 
     redesignated by subparagraph (B) of this paragraph,''.
       In section 2(a)(2)(E), as redesignated, by inserting 
     ``after paragraph (4)(B), as redesignated by subparagraph (B) 
     of this paragraph,'' after ``at the end''.
       In section 2(a)(3), strike ``(e)(3)'' each place it appears 
     and insert ``(e)''.
       In section 2(a)(3), redesignate subparagraphs (A) and (B) 
     as subparagraphs (D) and (E), respectively, and insert the 
     following:
       (A) in subparagraph (2), by striking ``In'' and inserting 
     ``Subject to paragraph (3), in'';
       (B) by redesignating paragraphs (3) and (4) as paragraphs 
     (4) and (5), respectively;
       (C) by inserting the following:
       ``(3) Waiver for certain individuals.--In the case of 
     individuals who have received amounts of Federal Pandemic 
     Unemployment Compensation or Mixed Earner Unemployment 
     Compensation under this section to which they were not 
     entitled, the State may not require such individuals to repay 
     the amounts of such pandemic unemployment assistance to the 
     State agency if--
       ``(A) the State agency determines that the payment of such 
     Federal Pandemic Unemployment Compensation or Mixed Earner 
     Unemployment Compensation was without fault on the part of 
     any such individual, and
       ``(B) such individual--
       ``(i) is a worker age 60 or older who is receiving benefits 
     under title II of the Social Security Act (42 U.S.C. 401 et 
     seq.);
       ``(ii) is a veteran, as such term is defined in section 101 
     of title 38, United States Code; or
       ``(iii) was working in health care (including as a provider 
     or support staff) in 2020 or 2021.'';
       In section 2(a)(3)(D), as redesignated, strike 
     ``subparagraph (A)'' and insert ``paragraph (4)(A), as 
     redesignated by subparagraph (B) of this paragraph,''.
       In section 2(a)(3)(E), as redesignated, by inserting 
     ``after paragraph (4)(B), as redesignated by subparagraph (B) 
     of this paragraph,'' after ``at the end''.
       At the end of section 2(a) add the following:
       (6) Waiver for certain individuals.--
       (A) In general.--In the case of individuals who have 
     received applicable Federal unemployment payments to which 
     they were not entitled, the State may not require such 
     individuals to repay such amounts to the State agency if--
       (i) the State agency determines that the payment of such 
     amounts was without fault on the part of any such individual, 
     and
       (ii) such individual--

       (I) is a worker age 60 or older who is receiving benefits 
     under title II of the Social Security Act (42 U.S.C. 401 et 
     seq.);
       (II) is a veteran, as such term is defined in section 101 
     of title 38, United States Code; or
       (III) was working in health care (including as a provider 
     or support staff) in 2020 or 2021.

       (B) Applicable federal unemployment payments.--In this 
     paragraph, the term ``applicable Federal unemployment 
     payments'' means--
       (i) amounts of sharable extended compensation and sharable 
     regular compensation from a State to which paragraph (4) 
     applies for weeks of unemployment described in such 
     paragraph; and
       (ii) amounts of regular compensation from a State described 
     in paragraph (5) for the first week of regular unemployment 
     for which the State received full Federal funding under the 
     agreement described in such paragraph.

  The SPEAKER pro tempore. Pursuant to clause 2(b) of rule XIX, the 
previous question is ordered on the motion to recommit.
  The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.

[[Page H2293]]

  

  Mrs. SYKES. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this question are postponed.

                          ____________________