IB
Union Calendar No. 21
118THCONGRESS
1
STSESSION H. R. 1163
[Report No. 118–34]
To provide incentives for States to recover fraudulently paid Federal and
State unemployment compensation, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
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
PRIL6, 2023
Additional sponsors: Mr. S
ESSIONS, Mr. POSEY, Mr. SANTOS, Ms. GREENEof
Georgia, Mr. D
ONALDS, Mr. HILL, Mr. JACKSONof Texas, Mr. YAKYM,
Mr. R
OGERSof Alabama, and Mr. MAST
A
PRIL6, 2023
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
[For text of introduced bill, see copy of bill as introduced on February 24, 2023]
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 2
•HR 1163 RH
A BILL
To provide incentives for States to recover fraudulently paid
Federal and State unemployment compensation, and for
other purposes.
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6652 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 3
•HR 1163 RH
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
SEC. 2. RECOVERING FEDERAL FRAUDULENT COVID UNEM-6
PLOYMENT COMPENSATION PAYMENTS. 7
(a) A
LLOWINGSTATES TORETAINPERCENTAGE OF 8
O
VERPAYMENTS FORPROGRAMINTEGRITY.— 9
(1) P
ANDEMIC UNEMPLOYMENT ASSISTANCE .— 10
Section 2102(d) of the CARES Act (15 U.S.C. 11
9021(d)) is amended by amending paragraph (4) to 12
read as follows: 13
‘‘(4) F
RAUD AND OVERPAYMENTS .—Section 14
2107(e) shall apply with respect to pandemic unem-15
ployment assistance under this section by substituting 16
‘pandemic unemployment assistance’ for ‘pandemic 17
emergency unemployment compensation’ each place it 18
appears in such section 2107(e).’’. 19
(2) F
EDERAL PANDEMIC UNEMPLOYMENT COM -20
PENSATION.—Section 2104(f)(3) of such Act (15 21
U.S.C. 9023(f)(3)) is amended— 22
(A) in subparagraph (A)— 23
(i) by striking ‘‘3-year’’ and inserting 24
‘‘10-year’’; and 25
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 4
•HR 1163 RH
(ii) by inserting ‘‘, except that a State 1
may retain a percentage of any amounts re-2
covered as described in subparagraph (C)’’ 3
before the period at the end; and 4
(B) by adding at the end the following: 5
‘‘(C) R
ETENTION OF PERCENTAGE OF RE -6
COVERED FUNDS.—The State agency may retain 7
25 percent of any amount recovered from over-8
payments of Federal Pandemic Unemployment 9
Compensation or Mixed Earner Unemployment 10
Compensation that were determined to be made 11
due to fraud. Amounts so retained by the State 12
agency shall be used for any of following: 13
‘‘(i) Modernizing unemployment com-14
pensation systems and information tech-15
nology to improve identity verification and 16
validation of applicants. 17
‘‘(ii) Reimbursement of administrative 18
costs incurred by the State to identify and 19
pursue recovery of fraudulent overpayments. 20
‘‘(iii) Hiring fraud investigators and 21
prosecutors. 22
‘‘(iv) Other program integrity activi-23
ties as determined by the State.’’; 24
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 5
•HR 1163 RH
(3) PANDEMIC EMERGENCY UNEMPLOYMENT 1
COMPENSATION.—Section 2107(e)(3) of such Act (15 2
U.S.C. 9025(e)(3)) is amended— 3
(A) in subparagraph (A)— 4
(i) by striking ‘‘3-year’’ and inserting 5
‘‘10-year’’; and 6
(ii) by inserting ‘‘, except that a State 7
may retain a percentage of any amounts re-8
covered as described in subparagraph (C)’’ 9
before the period at the end; and 10
(B) by adding at the end the following: 11
‘‘(C) R
ETENTION OF PERCENTAGE OF RE -12
COVERED FUNDS.—The State agency may retain 13
25 percent of any amount recovered from over-14
payments of pandemic emergency unemployment 15
compensation that were determined to be made 16
due to fraud. Amounts so retained by the State 17
agency shall be used for any of following: 18
‘‘(i) Modernizing unemployment com-19
pensation systems and information tech-20
nology to improve identity verification and 21
validation of applicants. 22
‘‘(ii) Reimbursement of administrative 23
costs incurred by the State to identify and 24
pursue recovery of fraudulent overpayments. 25
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 6
•HR 1163 RH
‘‘(iii) Hiring fraud investigators and 1
prosecutors. 2
‘‘(iv) Other program integrity activi-3
ties as determined by the State.’’. 4
(4) E
XTENDED UNEMPLOYMENT COMPENSA -5
TION.—A State to which section 4105 of the Families 6
First Coronavirus Response Act (26 U.S.C. 3304 7
note) applied may retain 25 percent of any amount 8
recovered from overpayments of sharable extended 9
compensation and sharable regular compensation (as 10
such terms are defined in section 204 of the Federal- 11
State Extended Unemployment Compensation Act of 12
1970) paid for weeks of unemployment described in 13
such section 4105 that were determined to be made 14
due to fraud. Amounts so retained by the State agen-15
cy shall be used for any of the purposes described in 16
section 2107(e)(3)(C) of the CARES Act (15 U.S.C. 17
9025(e)(3)(C)). 18
(5) F
IRST WEEK OF REGULAR COMPENSATION .— 19
A State that was a party to an agreement under sec-20
tion 4105 of the CARES Act (15 U.S.C. 9024) may 21
retain 25 percent of any amount recovered from over-22
payments of regular compensation paid to individ-23
uals by the State for their first week of regular unem-24
ployment for which the State received full Federal 25
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 7
•HR 1163 RH
funding under such agreement in any case in which 1
such overpayments were determined to be made due to 2
fraud. Amounts so retained by the State agency shall 3
be used for any of the purposes described in section 4
2107(e)(3)(C) of the CARES Act (15 U.S.C. 5
9025(e)(3)(C)). 6
(b) T
REATMENTUNDERWITHDRAWALSTANDARD AND 7
I
MMEDIATEDEPOSITREQUIREMENTS.—Any amount re-8
tained by a State pursuant to paragraph (4) or (5) of sub-9
section (a) or under section 2102(d)(4), section 10
2104(f)(3)(C), or 2107(e)(3)(C) of the CARES Act, and used 11
for the purposes described therein, shall not be considered 12
to violate the withdrawal standard and immediate deposit 13
requirements of paragraph (4) or (5) of section 303(a) of 14
the Social Security Act (42 U.S.C. 503(a)) or paragraph 15
(3) or (4) of section 3304(a) of the Internal Revenue Code 16
of 1986. 17
(c) L
IMITATION ONRETENTIONAUTHORITY.—The au-18
thority of a State to retain any amount pursuant to para-19
graph (4) or (5) of subsection (a) and under section 20
2102(d)(4), section 2104(f)(3)(C), and 2107(e)(3)(C) of the 21
CARES Act shall apply only— 22
(1) with respect to an amount recovered on or 23
after the date of enactment of this Act; and 24
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 8
•HR 1163 RH
(2) during the 10-year period beginning on the 1
date on which such amount was received by an indi-2
vidual not entitled to such amount. 3
SEC. 3. PERMISSIBLE USES OF UNEMPLOYMENT FUND FOR 4
PROGRAM ADMINISTRATION. 5
(a) W
ITHDRAWALSTANDARD IN THEINTERNALREV-6
ENUECODE.—Section 3304(a)(4) of the Internal Revenue 7
Code of 1986 is amended— 8
(1) in subparagraph (F), by striking ‘‘and’’ after 9
the semicolon; and 10
(2) by inserting after subparagraph (G) the fol-11
lowing new subparagraphs: 12
‘‘(H) provided the certifications made by 13
the State as described in section 4 of the Pro-14
tecting Taxpayers and Victims of Unemployment 15
Fraud Act are in effect at the time of approval 16
of the State law under this subsection, an 17
amount, not to exceed 5 percent, of any overpay-18
ment of compensation recovered by the State 19
(other than an overpayment made as the result 20
of agency error) may, immediately following the 21
State’s receipt of such recovered amount, be de-22
posited in a State fund from which money may 23
be withdrawn for— 24
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 9
•HR 1163 RH
‘‘(i) the payment of costs of deterring, 1
detecting, and preventing improper pay-2
ments; 3
‘‘(ii) purposes relating to the proper 4
classification of employees and the provi-5
sions of State law implementing section 6
303(k) of the Social Security Act; 7
‘‘(iii) the payment to the Secretary of 8
the Treasury to the credit of the account of 9
the State in the Unemployment Trust Fund; 10
‘‘(iv) modernizing the State’s unem-11
ployment insurance technology infrastruc-12
ture; or 13
‘‘(v) otherwise assisting the State in 14
improving the timely and accurate admin-15
istration of the State’s unemployment com-16
pensation law; and 17
‘‘(I) provided the certifications made by the 18
State as described in section 4 of the Protecting 19
Taxpayers and Victims of Unemployment Fraud 20
Act are in effect at the time of approval of the 21
State law under this subsection, an amount, not 22
to exceed 5 percent, of any payments of contribu-23
tions, or payments in lieu of contributions, that 24
are collected as a result of an investigation and 25
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 10
•HR 1163 RH
assessment by the State agency may, imme-1
diately following receipt of such payments, be de-2
posited in a State fund from which moneys may 3
be withdrawn for the purposes specified in sub-4
paragraph (H);’’. 5
(b) D
EFINITION OFUNEMPLOYMENTFUND.—Section 6
3306(f) of the Internal Revenue Code of 1986 is amended 7
by striking ‘‘and for refunds of sums’’ and all that follows 8
and inserting ‘‘, except as otherwise provided in section 9
3304(a)(4), section 303(a)(5) of the Social Security Act, or 10
any other provision of Federal unemployment compensation 11
law.’’. 12
(c) W
ITHDRAWALSTANDARD INSOCIALSECURITY 13
A
CT.—Section 303(a)(5) of the Social Security Act (42 14
U.S.C. 503(a)(5)) is amended by striking ‘‘and for refunds 15
of sums’’ and all that follows and inserting ‘‘except as other-16
wise provided in this section, section 3304(a)(4) of the In-17
ternal Revenue Code of 1986, or any other provisions of 18
Federal unemployment compensation law; and’’. 19
(d) I
MMEDIATEDEPOSITREQUIREMENTS IN THE IN-20
TERNALREVENUECODE.—Section 3304(a)(3) of the Inter-21
nal Revenue Code of 1986 is amended to read as follows: 22
‘‘(3) all money received in the unemployment 23
fund shall immediately upon such receipt be paid 24
over to the Secretary of the Treasury to the credit of 25
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 11
•HR 1163 RH
the Unemployment Trust Fund established by section 1
904 of the Social Security Act (42 U.S.C. 1104), ex-2
cept for— 3
‘‘(A) refunds of sums improperly paid into 4
such fund; 5
‘‘(B) refunds paid in accordance with the 6
provisions of section 3305(b); and 7
‘‘(C) amounts deposited in a State fund in 8
accordance with subparagraph (H) or (I) of 9
paragraph (4);’’. 10
(e) I
MMEDIATEDEPOSITREQUIREMENT IN SOCIAL 11
S
ECURITYACTREQUIREMENT.—Section 303(a)(4) of the 12
Social Security Act (42 U.S.C. 503(a)(4)) is amended by 13
striking the parenthetical and inserting ‘‘(except as other-14
wise provided in this section, section 3304(a)(3) of the In-15
ternal Revenue Code of 1986, or any other provisions of 16
Federal unemployment compensation law)’’. 17
(f) A
PPLICATION TOFEDERALPAYMENTS.—When ad-18
ministering any Federal program providing compensation 19
(as defined in section 3306 of the Internal Revenue Code 20
of 1986), the State shall use the authority provided under 21
subparagraphs (H) and (I) of section 3304(a)(4) of such 22
Code in the same manner as such authority is used with 23
respect to improper payments made under the State unem-24
ployment compensation law. With respect to improper Fed-25
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 12
•HR 1163 RH
eral payments recovered consistent with the authority under 1
subparagraphs (H) and (I) of such section, the State shall 2
immediately deposit the same percentage of the recovered 3
payments into the same State fund as provided in the State 4
law implementing that section. 5
(g) E
FFECTIVEDATE.—The amendments made by this 6
section shall apply to overpayments or payments or con-7
tributions (or payments in lieu of contributions) that are 8
collected as a result of an investigation and assessment by 9
the State agency after the end of the 2-year period begin-10
ning on the date of the enactment of this Act, except that 11
nothing in this section shall be interpreted to prevent a 12
State from amending its law before the end of the 2-year 13
period beginning on the date of the enactment of this Act. 14
SEC. 4. PREVENTING UNEMPLOYMENT COMPENSATION 15
FRAUD THROUGH DATA MATCHING. 16
(a) I
NGENERAL.—As a condition for the eligibility 17
of a State to implement the exceptions to the withdrawal 18
standard described in subparagraphs (H) and (I) of section 19
3304(a)(4) of the Internal Revenue Code, the State shall cer-20
tify each of the following: 21
(1) I
NTEGRITY DATA HUB.—The State uses the 22
system designated by the Secretary of Labor (or an-23
other system at the discretion of the State) for cross- 24
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 13
•HR 1163 RH
matching claimants of unemployment compensation 1
to prevent and detect fraud and improper payments. 2
(2) U
SE OF FRAUD PREVENTION AND DETECTION 3
SYSTEMS.—The State has established procedures to do 4
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 So-8
cial 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
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 14
•HR 1163 RH
change System (or another system at the discre-1
tion of the State) to facilitate employer responses 2
to requests for information from State workforce 3
agencies. 4
(C) I
NCARCERATED INDIVIDUALS .—Seek in-5
formation from the Commissioner of Social Secu-6
rity under sections 202(x)(3)(B)(iv) and 7
1611(e)(1)(I)(iii) of the Social Security Act, or 8
from such other sources as the State agency de-9
termines appropriate, to obtain the information 10
necessary to carry out the provisions of a State 11
law under which an individual who is confined 12
in a jail, prison, or other penal institution or 13
correctional facility is ineligible for unemploy-14
ment compensation on account of such individ-15
uals inability to satisfy the requirement under 16
section 303(a)(12) of such Act. 17
(D) D
ECEASED INDIVIDUALS.—Compare in-18
formation of individuals claiming unemploy-19
ment compensation against the information re-20
garding deceased individuals furnished to or 21
maintained by the Commissioner of Social Secu-22
rity under section 205(r) of the Social Security 23
Act. 24
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 15
•HR 1163 RH
(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 a 9
merit basis on an emergency temporary basis as determined 10
by the Secretary, including for detection, pursuit, and re-11
covery of fraudulent overpayments under Federal pandemic 12
unemployment compensation programs authorized under 13
the CARES Act (15 U.S.C. 9021 et seq.), subject to the suc-14
ceeding sentence, such modifications shall be disregarded for 15
the purposes of applying section 303 of the Social Security 16
Act (42 U.S.C. 503) and section 3304 of the Internal Rev-17
enue Code of 1986 to such State law. Such modifications 18
may continue through December 31, 2030. 19
SEC. 6. FRAUD ENFORCEMENT HARMONIZATION. 20
Notwithstanding any other provision of law, any 21
criminal charge or civil enforcement action alleging that 22
an individual engaged in fraud with respect to compensa-23
tion (as defined in section 3306 of the Internal Revenue 24
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB 16
•HR 1163 RH
Code of 1986) shall be filed not later than 10 years after 1
the offense was committed. 2
SEC. 7. BUDGET OFFSET. 3
Section 2118 of the CARES Act (15 U.S.C. 9034) is 4
repealed. 5
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB Union Calendar No.
21
118
TH
CONGRESS
1
ST
S
ESSION
H. R. 1163
[Report No. 118–34]
A BILL
To provide incentives for States to recover fraudu-
lently paid Federal and State unemployment
compensation, and for other purposes.
A
PRIL
6, 2023
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union,
and ordered to be printed
VerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00018 Fmt 6651 Sfmt 6651 E:\BILLS\H1163.RH H1163
pbinns on DSKJLVW7X2PROD with $$_JOB