Lawmakers Want More Data, Enforcement On Employer Benefits Fraud

Sep 12, 2017

State lawmakers vented frustrations Tuesday at a lack of details on what unemployment and employer tax fraud costs the state.

At the sole meeting of a summer study committee on those issues, regulators said the state may be missing millions in revenue because of fraud – but couldn’t say how much they’ve clawed back.

State workforce development officials say Indiana has the second-lowest benefits fraud rate in the nation – after Hawaii – and has saved more than $200 million by preventing and collecting on fraud in the past three years.

Officials also say their latest audit shows $14 million in under-reported unemployment fund contributions, and $53 million in taxes lost to bosses who misclassify their workers as, for example, contractors – who don’t receive the same unemployment and benefits.

That’s a lot of potentially missing money, amid fewer and fewer actual jobless claims and declining federal contributions. It all leaves the state’s unemployment fund in a delicate position.

Legislators like State Sen. David Niezgodski (D-South Bend) were frustrated state officials didn’t know how much of the money Indiana recoups.

“They’ve got this great realization of loss, but they don’t have the means to truly go out and collect it,” Niezgodski says.

Plus, he notes, employee misclassification fraud affects other tax streams collected by other state agencies, such as the Department of Revenue. But workforce development officials say there’s little inter-agency data sharing or coordination on fraud enforcement.

Niezgodski says he plans to introduce legislation next session to fix that.