State to garnish tax refunds in unemployment fraud cases


SPRINGFIELD -- Thousands of Illinoisans may see their federal tax refunds lighter than expected — or gone altogether — because of a state crackdown on unemployment fraud.

The Illinois Department of Employment Security said Tuesday it has identified another 12,000 people who wrongfully collected unemployment benefits while working. The department said they collected nearly $46 million in benefits.

They have been notified that their state and federal tax refunds will be garnished as the state attempts to recover the money.

IDES said this second phase of its crackdown on unemployment fraud is tied to people who sought extensions to file their federal tax returns in April.

IDES spokesman Greg Rivara said people on the list were given a chance to repay.

“It’s important to note these are not individuals who are making an innocent mistake,” he said. “These are individuals who knowingly collected benefits while working and rejected an offer to enter into a repayment plan.”

If anyone on the list is entitled to a federal tax refund, the state will take money from it to repay the improperly obtained benefits.

“We will take our bite from that return before it gets to the individual,” Rivara said.

If the federal return won’t cover the entire IDES debt and the person applies for benefits in the future, the  agency will not pay unemployment benefits to the person until the debt is repaid.

IDES has been able to garnish state tax refunds because of fraud since 2007.

Earlier this year, IDES identified about $160 million owed by people who filed their taxes in April. The agency has been able to collect about $42 million of that.

As part of the crackdown, IDES is getting information about new hires more quickly than it did in the past. Previously, the state didn’t get the information for four to seven months after a person was hired. Now the information is provided in four to six weeks, speeding up efforts to find people ineligible to continue receiving unemployment benefits.

Doug Finke can be reached at (217) 788-1527.