I
118THCONGRESS
1
STSESSION H. R. 1163
To provide incentives for States to recover fraudulently paid Federal and
State unemployment compensation, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY24, 2023
Mr. S
MITHof Missouri (for himself, Mr. BUCHANAN, Mr. FERGUSON, Mr.
S
TEUBE, Mr. WENSTRUP, Mr. FEENSTRA, Mr. MOOREof Utah, Mr.
S
MUCKER, Mrs. MILLERof West Virginia, Mr. ESTES, Ms. VANDUYNE,
Mrs. S
TEEL, Ms. TENNEY, Ms. MALLIOTAKIS, Mr. CAREY, Mr.
K
USTOFF, Mr. KELLYof Pennsylvania, Mr. FITZPATRICK, Mr. MURPHY,
Mr. S
MITHof Nebraska, Mrs. FISCHBACH, Mr. LAHOOD, Mr.
S
CHWEIKERT, Mr. ARRINGTON, Mr. COMER, and Mr. HERN) introduced
the following bill; which was referred to the Committee on Ways and
Means
A BILL
To provide incentives for States to recover fraudulently paid
Federal and State unemployment compensation, and for
other purposes.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Protecting Taxpayers 4
and Victims of Unemployment Fraud Act’’. 5
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SEC. 2. RECOVERING FEDERAL FRAUDULENT COVID UNEM-1
PLOYMENT COMPENSATION PAYMENTS. 2
(a) A
LLOWINGSTATESTORETAINPERCENTAGE OF 3
O
VERPAYMENTS FOR PROGRAMINTEGRITY.— 4
(1) P
ANDEMIC UNEMPLOYMENT ASSISTANCE .— 5
Section 2102(d) of the CARES Act (15 U.S.C. 6
9021(d)) is amended by amending paragraph (4) to 7
read as follows: 8
‘‘(4) F
RAUD AND OVERPAYMENTS .—Section 9
2107(e) shall apply with respect to pandemic unem-10
ployment assistance under this section by sub-11
stituting ‘pandemic unemployment assistance’ for 12
‘pandemic emergency unemployment compensation’ 13
each place it appears in such section 2107(e).’’. 14
(2) F
EDERAL PANDEMIC UNEMPLOYMENT COM -15
PENSATION.—Section 2104(f)(3) of such Act (15 16
U.S.C. 9023(f)(3)) is amended— 17
(A) in subparagraph (A)— 18
(i) by striking ‘‘3-year’’ and inserting 19
‘‘10-year’’; and 20
(ii) by inserting ‘‘, except that a State 21
may retain a percentage of any amounts 22
recovered as described in subparagraph 23
(C)’’ before the period at the end; and 24
(B) by adding at the end the following: 25
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‘‘(C) RETENTION OF PERCENTAGE OF RE -1
COVERED FUNDS.—The State agency may re-2
tain 25 percent of any amount recovered from 3
overpayments of Federal Pandemic Unemploy-4
ment Compensation or Mixed Earner Unem-5
ployment Compensation that were determined 6
to be made due to fraud. Amounts so retained 7
by the State agency shall be used for any of fol-8
lowing: 9
‘‘(i) Modernizing unemployment com-10
pensation systems and information tech-11
nology to improve identity verification and 12
validation of applicants. 13
‘‘(ii) Reimbursement of administrative 14
costs incurred by the State to identify and 15
pursue recovery of fraudulent overpay-16
ments. 17
‘‘(iii) Hiring fraud investigators and 18
prosecutors. 19
‘‘(iv) Other program integrity activi-20
ties as determined by the State.’’. 21
(3) P
ANDEMIC EMERGENCY UNEMPLOYMENT 22
COMPENSATION.—Section 2107(e)(3) of such Act 23
(15 U.S.C. 9025(e)(3)) is amended— 24
(A) in subparagraph (A)— 25
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(i) by striking ‘‘3-year’’ and inserting 1
‘‘10-year’’; and 2
(ii) by inserting ‘‘, except that a State 3
may retain a percentage of any amounts 4
recovered as described in subparagraph 5
(C)’’ before the period at the end; and 6
(B) by adding at the end the following: 7
‘‘(C) R
ETENTION OF PERCENTAGE OF RE -8
COVERED FUNDS.—The State agency may re-9
tain 25 percent of any amount recovered from 10
overpayments of pandemic emergency unem-11
ployment compensation that were determined to 12
be made due to fraud. Amounts so retained by 13
the State agency shall be used for any of fol-14
lowing: 15
‘‘(i) Modernizing unemployment com-16
pensation systems and information tech-17
nology to improve identity verification and 18
validation of applicants. 19
‘‘(ii) Reimbursement of administrative 20
costs incurred by the State to identify and 21
pursue recovery of fraudulent overpay-22
ments. 23
‘‘(iii) Hiring fraud investigators and 24
prosecutors. 25
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‘‘(iv) Other program integrity activi-1
ties as determined by the State.’’. 2
(4) E
XTENDED UNEMPLOYMENT COMPENSA -3
TION.—A State to which section 4105 of the Fami-4
lies First Coronavirus Response Act (26 U.S.C. 5
3304 note) applied may retain 25 percent of any 6
amount recovered from overpayments of sharable ex-7
tended compensation and sharable regular com-8
pensation (as such terms are defined in section 204 9
of the Federal-State Extended Unemployment Com-10
pensation Act of 1970) paid for weeks of unemploy-11
ment described in such section 4105 that were deter-12
mined to be made due to fraud. Amounts so retained 13
by the State agency shall be used for any of the pur-14
poses described in section 2107(e)(3)(C) of the 15
CARES Act (15 U.S.C. 9025(e)(3)(C)). 16
(5) F
IRST WEEK OF REGULAR COMPENSA -17
TION.—A State that was a party to an agreement 18
under section 4105 of the CARES Act (15 U.S.C. 19
9024) may retain 25 percent of any amount recov-20
ered from overpayments of regular compensation 21
paid to individuals by the State for their first week 22
of regular unemployment for which the State re-23
ceived full Federal funding under such agreement in 24
any case in which such overpayments were deter-25
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mined to be made due to fraud. Amounts so retained 1
by the State agency shall be used for any of the pur-2
poses described in section 2107(e)(3)(C) of the 3
CARES Act (15 U.S.C. 9025(e)(3)(C)). 4
(b) T
REATMENTUNDERWITHDRAWALSTANDARD 5
ANDIMMEDIATEDEPOSITREQUIREMENTS.—Any amount 6
retained by a State pursuant to paragraph (4) or (5) of 7
subsection (a) or under section 2102(d)(4), section 8
2104(f)(3)(C), or 2107(e)(3)(C) of the CARES Act, and 9
used for the purposes described therein, shall not be con-10
sidered to violate the withdrawal standard and immediate 11
deposit requirements of paragraph (4) or (5) of section 12
303(a) of the Social Security Act (42 U.S.C. 503(a)) or 13
paragraph (3) or (4) of section 3304(a) of the Internal 14
Revenue Code of 1986. 15
(c) L
IMITATION ONRETENTIONAUTHORITY.—The 16
authority of a State to retain any amount pursuant to 17
paragraph (4) or (5) of subsection (a) and under section 18
2102(d)(4), section 2104(f)(3)(C), and 2107(e)(3)(C) of 19
the CARES Act shall apply only— 20
(1) with respect to an amount recovered on or 21
after the date of enactment of this Act; and 22
(2) during the 10-year period beginning on the 23
date on which such amount was received by an indi-24
vidual not entitled to such amount. 25
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SEC. 3. PERMISSIBLE USES OF UNEMPLOYMENT FUND FOR 1
PROGRAM ADMINISTRATION. 2
(a) W
ITHDRAWAL STANDARD IN THE INTERNAL 3
R
EVENUECODE.—Section 3304(a)(4) of the Internal 4
Revenue Code of 1986 is amended— 5
(1) in subparagraph (F), by striking ‘‘and’’ 6
after the semicolon; and 7
(2) by inserting after subparagraph (G) the fol-8
lowing new subparagraphs: 9
‘‘(H) provided the certifications made by 10
the State as described in section 4 of the Pro-11
tecting Taxpayers and Victims of Unemploy-12
ment Fraud Act are in effect at the time of ap-13
proval of the State law under this subsection, 14
an amount, not to exceed 5 percent, of any 15
overpayment of compensation recovered by the 16
State (other than an overpayment made as the 17
result of agency error) may, immediately fol-18
lowing the State’s receipt of such recovered 19
amount, be deposited in a State fund from 20
which money may be withdrawn for— 21
‘‘(i) the payment of costs of deterring, 22
detecting, and preventing improper pay-23
ments; 24
‘‘(ii) purposes relating to the classi-25
fication of employees and the provisions of 26
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State law implementing section 303(k) of 1
the Social Security Act; 2
‘‘(iii) the payment to the Secretary of 3
the Treasury to the credit of the account 4
of the State in the Unemployment Trust 5
Fund; 6
‘‘(iv) modernizing the State’s unem-7
ployment insurance technology infrastruc-8
ture; or 9
‘‘(v) otherwise assisting the State in 10
improving the timely and accurate admin-11
istration of the State’s unemployment com-12
pensation law; and 13
‘‘(I) provided the certifications made by 14
the State as described in section 4 of the Pro-15
tecting Taxpayers and Victims of Unemploy-16
ment Fraud Act are in effect at the time of ap-17
proval of the State law under this subsection, 18
an amount, not to exceed 5 percent, of any pay-19
ments of contributions, or payments in lieu of 20
contributions, that are collected as a result of 21
an investigation and assessment by the State 22
agency may, immediately following receipt of 23
such payments, be deposited in a State fund 24
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from which moneys may be withdrawn for the 1
purposes specified in subparagraph (H);’’. 2
(b) D
EFINITION OFUNEMPLOYMENT FUND.—Sec-3
tion 3306(f) of the Internal Revenue Code of 1986 is 4
amended by striking ‘‘and for refunds of sums’’ and all 5
that follows and inserting ‘‘, except as otherwise provided 6
in section 3304(a)(4), section 303(a)(5) of the Social Se-7
curity Act, or any other provision of Federal unemploy-8
ment compensation law.’’. 9
(c) W
ITHDRAWALSTANDARD INSOCIALSECURITY 10
A
CT.—Section 303(a)(5) of the Social Security Act (42 11
U.S.C. 503(a)(5)) is amended by striking ‘‘and for refunds 12
of sums’’ and all that follows and inserting ‘‘except as oth-13
erwise provided in this section, section 3304(a)(4) of the 14
Internal Revenue Code of 1986, or any other provisions 15
of Federal unemployment compensation law; and’’. 16
(d) I
MMEDIATEDEPOSITREQUIREMENTS IN THE IN-17
TERNALREVENUECODE.—Section 3304(a)(3) of the In-18
ternal Revenue Code of 1986 is amended to read as fol-19
lows: 20
‘‘(3) all money received in the unemployment 21
fund shall immediately upon such receipt be paid 22
over to the Secretary of the Treasury to the credit 23
of the Unemployment Trust Fund established by 24
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section 904 of the Social Security Act (42 U.S.C. 1
1104), except for— 2
‘‘(A) refunds of sums improperly paid into 3
such fund; 4
‘‘(B) refunds paid in accordance with the 5
provisions of section 3305(b); and 6
‘‘(C) amounts deposited in a State fund in 7
accordance with subparagraph (H) or (I) of 8
paragraph (4);’’. 9
(e) I
MMEDIATEDEPOSITREQUIREMENT IN SOCIAL 10
S
ECURITYACTREQUIREMENT.—Section 303(a)(4) of the 11
Social Security Act (42 U.S.C. 503(a)(4)) is amended by 12
striking the parenthetical and inserting ‘‘(except as other-13
wise provided in this section, section 3304(a)(3) of the In-14
ternal Revenue Code of 1986, or any other provisions of 15
Federal unemployment compensation law)’’. 16
(f) A
PPLICATION TOFEDERALPAYMENTS.—When 17
administering any Federal program providing compensa-18
tion (as defined in section 3306 of the Internal Revenue 19
Code of 1986), the State shall use the authority provided 20
under subparagraphs (H) and (I) of section 3304(a)(4) 21
of such Code in the same manner as such authority is 22
used with respect to improper payments made under the 23
State unemployment compensation law. With respect to 24
improper Federal payments recovered consistent with the 25
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authority under subparagraphs (H) and (I) of such sec-1
tion, the State shall immediately deposit the same percent-2
age of the recovered payments into the same State fund 3
as provided in the State law implementing that section. 4
(g) E
FFECTIVEDATE.—The amendments made by 5
this section shall apply to overpayments or payments or 6
contributions (or payments in lieu of contributions) that 7
are collected as a result of an investigation and assessment 8
by the State agency after the end of the 2-year period be-9
ginning on the date of the enactment of this Act, except 10
that nothing in this section shall be interpreted to prevent 11
a State from amending its law before the end of the 2- 12
year period beginning on the date of the enactment of this 13
Act. 14
SEC. 4. PREVENTING UNEMPLOYMENT COMPENSATION 15
FRAUD THROUGH DATA MATCHING. 16
(a) I
NGENERAL.—As a condition for the eligibility 17
of a State to implement the exceptions to the withdrawal 18
standard described in subparagraphs (H) and (I) of sec-19
tion 3304(a)(4) of the Internal Revenue Code, the State 20
shall certify each of the following: 21
(1) I
NTEGRITY DATA HUB .—The State uses the 22
system designated by the Secretary of Labor (or an-23
other system at the discretion of the State) for 24
cross-matching claimants of unemployment com-25
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pensation to prevent and detect fraud and improper 1
payments. 2
(2) U
SE OF FRAUD PREVENTION AND DETEC -3
TION SYSTEMS.—The State has established proce-4
dures to do the following: 5
(A) N
ATIONAL DIRECTORY OF NEW 6
HIRES.—Use the National Directory of New 7
Hires established under section 453(i) of the 8
Social Security Act— 9
(i) to compare information in such Di-10
rectory against information about individ-11
uals claiming unemployment compensation 12
to identify any such individuals who may 13
have become employed; 14
(ii) to take timely action to verify 15
whether the individuals identified pursuant 16
to clause (i) are employed; and 17
(iii) upon verification pursuant to 18
clause (ii), to take appropriate action to 19
suspend or modify unemployment com-20
pensation payments, and to initiate recov-21
ery of any improper payments that have 22
been made. 23
(B) S
TATE INFORMATION DATA EXCHANGE 24
SYSTEM.—Use the State Information Data Ex-25
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change System (or another system at the dis-1
cretion of the State) to facilitate employer re-2
sponses to requests for information from State 3
workforce agencies. 4
(C) I
NCARCERATED INDIVIDUALS .—Seek 5
information from the Commissioner of Social 6
Security under sections 202(x)(3)(B)(iv) and 7
1611(e)(1)(I)(iii) of the Social Security Act, or 8
from such other sources as the State agency de-9
termines appropriate, to obtain the information 10
necessary to carry out the provisions of a State 11
law under which an individual who is confined 12
in a jail, prison, or other penal institution or 13
correctional facility is ineligible for unemploy-14
ment compensation on account of such individ-15
uals inability to satisfy the requirement under 16
section 303(a)(12) of such Act. 17
(D) D
ECEASED INDIVIDUALS .—Compare 18
information of individuals claiming unemploy-19
ment compensation against the information re-20
garding deceased individuals furnished to or 21
maintained by the Commissioner of Social Se-22
curity under section 205(r) of the Social Secu-23
rity Act. 24
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(b) UNEMPLOYMENT COMPENSATION.—For the pur-1
poses of this section, any reference to unemployment com-2
pensation shall be considered to refer to compensation as 3
defined in section 3306 of the Internal Revenue Code of 4
1986. 5
SEC. 5. EXTENSION OF EMERGENCY STATE STAFFING 6
FLEXIBILITY. 7
If a State modifies its unemployment compensation 8
law and policies with respect to personnel standards on 9
a merit basis on an emergency temporary basis as deter-10
mined by the Secretary, including for detection, pursuit, 11
and recovery of fraudulent overpayments, subject to the 12
succeeding sentence, such modifications shall be dis-13
regarded for the purposes of applying section 303 of the 14
Social Security Act (42 U.S.C. 503) and section 3304 of 15
the Internal Revenue Code of 1986 to such State law. 16
Such modifications may continue through December 31, 17
2030. 18
SEC. 6. FRAUD ENFORCEMENT HARMONIZATION. 19
Notwithstanding any other provision of law, any 20
criminal charge or civil enforcement action alleging that 21
an individual engaged in fraud with respect to compensa-22
tion (as defined in section 3306 of the Internal Revenue 23
Code of 1986) shall be filed not later than 10 years after 24
the offense was committed. 25
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SEC. 7. BUDGET OFFSET. 1
Section 2118 of the CARES Act (15 U.S.C. 9034) 2
is repealed. 3
Æ
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