House Ways & Means Committee Issues Report on Protecting Taxpayers & Victims of Unemployment Fraud Act (Part 1 of 2)

WASHINGTON, April 28 -- The House Ways and Means Committee issued a report (H.Rpt. 118-34) on the Protecting Taxpayers and Victims of Unemployment Fraud Act (H.R. 1163), which aims to provide incentives for states to recover fraudulently paid federal and state unemployment compensation. The report was advanced by Rep. Jason Smith, R-Missouri, on April 6, 2023.

Here are excerpts:

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A. Purpose and Summary

The bill, H.R. 1163, the "Protecting Taxpayers and Victims of Unemployment Fraud Act," as ordered reported by the Committee on Ways and Means on February 28, 2023, recovers potentially billions of dollars in stolen pandemic unemployment benefits. The legislation provides states with incentives to investigate and recover lost funds, improves program integrity to prevent future fraud, and extends the statute of limitations for prosecuting fraud.

B. Background and Need for Legislation

Unemployment Insurance (UI) is a joint state-federal partnership created under the Social Security Act of 1935 (P.L. 74-271). In most states, the program provides up to 26 weeks of partial wage replacement to workers who become unemployed through no fault of their own and meet state-established eligibility rules while they seek work. Federal laws and regulations provide funding for the administration of state programs and broad guidelines on benefit coverage, financing, eligibility, and benefit determination; however, each state operates their own UI program. States fund UI benefits through payroll taxes on employers under the authority of State Unemployment Tax Acts. Federal funding for state administration of UI programs is supported by payroll taxes on employers under the authority of the Federal Unemployment Tax Act. These taxes are deposited in accounts within the Unemployment Trust Fund (UTF).

The U.S. Department of Labor (DOL) provides oversight of state programs and any temporary federal UI benefits or expansions of benefits during a recession or emergencies. Federal law includes an automatic expansion of regular state UI benefits with the Extended Benefit (EB) program established by the Federal-State Extended Unemployment Compensation Act of 1970 (P.L. 91-373). States that meet certain economic conditions can trigger EB "on" and may provide up to an additional 13 or 20 weeks of benefits once regular state benefits are exhausted, depending on worker eligibility, state law, and additional federal eligibility requirements. The EB program is funded 50 percent by the federal government and 50 percent by the states.

Congress massively expanded UI benefits during the COVID-19 pandemic as businesses shut down in response to the public health emergency and millions of Americans lost their jobs. On March 18, 2020, Congress passed the Families First Coronavirus Response Act (FFCRA) (P.L. 116-127) to provide states with support to address surging unemployment claims through staffing flexibility, 100 percent federal financing of EB, $1 billion in emergency administrative funding, and other temporary UI measures. This was followed by the creation of several new federally funded UI programs on March 27, 2020, in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136). These programs included: Pandemic Unemployment Assistance (PUA), Pandemic Emergency Unemployment Compensation (PEUC), Federal Pandemic Unemployment Compensation (FPUC), and included emergency relief for government entities and non- profits. The Consolidated Appropriations Act of 2021 (P.L. 116- 260), extended the authorization of these programs and created the Mixed Earner Unemployment Compensation (MEUC) program. The American Rescue Plan Act (ARPA) of 2021 (P.L. 117-2) further extended these programs through September 6, 2021./1/

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/1/For more detailed information see: "Unemployment Insurance (UI) Benefits: Permanent-Law Programs and the COVID-19 Pandemic Response," Congressional Research Service; January 31, 2022, R46687.

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FPUC: Provided an additional $600/week from March 2020 through July 31, 2020; then $300/week from January 2021 through September 4, 2021.

PEUC: Provided an extra 13 weeks of benefits after state benefits and EB ended. State benefits typically cover 26 weeks.

PUA: Provided benefits to gig workers, freelancers, and other self-employed individuals not covered by regular state UI systems.

100 percent federally funded EB: Provided an extra 13 or 30 weeks, depending on worker eligibility, state law, and economic conditions in the state, after state benefits expired.

MEUC: Provided an additional $100/week in benefits to mixed earner self-employed and W 2 workers.

Federal and state spending on unemployment benefits totaled $878 billion over a period of less than two years./2/ This includes approximately $209 billion from state UI trust funds and $669 billion in federal general revenue funds. The amount of unemployment spending during the pandemic was grossly out of proportion compared to past recessions. As shown in Figure 1/3/, combined federal unemployment spending in 2020 was three times the next-highest year--in 2010. During the 2009 recession, an additional $25 per week was made available through a federal UI supplement. During the COVID-19 pandemic, an additional $600 per week federal UI supplement was made available (on top of any state weekly benefit amount) for a six-month period, this was subsequently lowered to $300 per week. Congress also provided 75 additional weeks of federally funded benefits for those who exhausted state benefits and expanded coverage to self-employed and gig workers not covered by state programs.

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/2/U.S. Department of Labor; https://oui.doleta.gov/unemploy/docs/cares_act_funding_state.html.

/3/"Lessons from the Unprecedented Fraud and Abuse of the Unemployment Benefits System during the Pandemic," Matt Weidinger, American Enterprise Institute, September 21, 2022.

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At the beginning of the pandemic, CARES Act unemployment programs provided critical support to unemployed workers to make sure temporary job losses didn't turn into permanent ones. In February 2020, there were 5.7 million unemployed workers in the United States and the unemployment rate was 3.5 percent. By April 2020, that jumped to over 23 million and the unemployment rate reached an all-time high of 14.7 percent. However, over time, as the economy began to reopen, it became clear that enhanced benefits discouraged Americans from returning to work, making it harder for employers to hire, and provided an easy target for fraudsters and organized criminal enterprises.

Under the not so watchful eye of Committee Democrats, pandemic unemployment fraud became the greatest theft of taxpayer dollars in American history.

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UI fraud was not a victimless crime. Unchecked fraud delayed legitimate payments and diverted funding away from unemployed workers who truly needed the benefit during the economic downturn. Many unemployed workers who applied for benefits found themselves unable to get assistance because someone else had stolen their identity and filed a fraudulent claim in their name. It also turned thousands of Americans into unwitting identity theft victims. In addition, it became increasingly clear that groups that perpetrated UI fraud posed a potential national security risk. As fraud cases work their way through the court system, we are learning more about the involvement of foreign actors and international organized crime groups persistently targeting state systems. Some of these groups used American citizens as "money mules" to launder funds through the U.S. financial system to offshore bank accounts. For example:

In July 2021, the U.S. Attorney's Office in Massachusetts charged two Nigerian nationals with conspiracy to commit bank and wire fraud and engaging in unlawful monetary transactions in connection with expansive online fraud schemes, including romance scams, and unemployment assistance fraud./4/

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/4/"Two Nigerian Nationals Indicted for Romance and Pandemic Unemployment Fraud Schemes," U.S. Attorney's Office, District of Massachusetts, July 26, 2021.

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In November 2021, the U.S. Attorney's office in Pennsylvania brought an indictment against a Turkish citizen charged with mail fraud, wire fraud, and money laundering in connection with UI fraud./5/

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/5/"Turkish Citizen Living in the Pittsburgh Area Indicted on Fraud Charges," U.S. Attorney's Office, Western District of Pennsylvania, November 30, 2021.

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Americans hit hard by the pandemic struggled to reclaim stolen identities and get assistance, as criminal organizations and foreign fraudsters exploited a national crisis to steal hundreds of billions in benefits. Based on flags raised by the Department of Labor Inspector General (DOL-OIG) and Government Accountability Office (GAO), Committee Republicans worked diligently to shine a spotlight on the extent of pandemic UI fraud, including holding two roundtables to hear from state workforce directors, victims of identity theft, and employers to learn about the consequences of unchecked unemployment fraud./6/ Additionally:

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/6/Committee on Ways and Means Republican roundtable, "Consequences of Unchecked Unemployment Fraud," May 10, 2021; Committee on Ways and Means Republican roundtable "Pandemic Unemployment Fraud: $80 Billion and Counting," February 22, 2022.

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In August 2021, Committee Republicans requested GAO investigate fraudulent activities in COVID-19 unemployment programs./7/

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/7/Letter: Republican Leaders Urge GAO to Investigate Fraudulent Activity in COVID Unemployment Insurance Programs, August 31, 2021.

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In May 2022, House Republican leaders on the Ways and Means, Budget, Small Business, and Judiciary Committees sent a letter to Attorney General Merrick Garland inquiring about the lack of action taken by the Director for COVID-19 Fraud Enforcement charged with leading criminal and civil enforcement efforts to combat COVID-19-related fraud./8/

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/8/Letter: Republican Leaders Demand Answers on Billions of Taxpayer Dollars Stolen Due to COVID Era Fraud, May 31, 2022.

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In February 2023, under the new Republican majority, Chairman Jason Smith (R-MO) held the first full committee hearing to investigate the size, scope, and severity of pandemic unemployment fraud.

Meanwhile, during the 117th Congress, despite having ample knowledge of the egregious pandemic fraud and the countless incidents of identity theft on Americans, Congressional Democrats walked away from their oversight responsibilities and ignored repeated calls for oversight hearings, leaving criminals to profit off the backs of taxpayers.

In March 2021, and again in February 2022, Committee Republicans sent letters to then-Chairman Richard Neal (D-MA) requesting the Committee immediately schedule an oversight hearing to investigate the size, scope, and severity of criminal fraud in pandemic unemployment insurance programs in response to COVID-19./9/ These letters received no response. These requests were ignored despite multiple early warnings and alerts from non-partisan oversight and watchdog agencies. For example, as early as May 2020, DOL-OIG issued an alert memorandum describing concerns regarding claimant self- certification in the PUA program saying, "reliance on such self-certifications rendered the PUA program highly vulnerable to improper payments, including fraud."/10/ In the same month, the Secret Service circulated a memo to its field offices saying an international crime ring was filing unemployment claims in different states using Social Security numbers belonging to identity theft victims, including first responders, government personnel, and school employees./11/ In August 2020, DOL-OIG issued another alert memorandum reporting that states were not using existing tools effectively to combat fraud and other improper payments. GAO also issued repeated warnings about the vulnerability for abuse of CARES Act unemployment insurance programs./12/

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/9/Ways and Means Republicans sent two letters to Chairman Neal requesting a hearing on reports of fraud in COVID unemployment programs on March 12, 2021, and February 22, 2022.

/10/"Alert Memorandum: The Pandemic Unemployment Assistance Program Needs Proactive Measures to Detect and Prevent Improper Payments and Fraud," DOL-OIG, Report No. 19-20-002-03-315, May 26, 2020.

/11/"Massive Fraud Against Unemployment Insurance Programs," U.S. Secret Service, Information Only Alert, May 5, 2020.

/12/"COVID-19: Critical Vaccine Distribution, Supply Chain, Program Integrity, and other Challenges Require Focused Federal Attention," GAO-21-265, January 28, 2021.

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What's worse, Democrats made it easier to defraud taxpayers by voting to end phaseouts of emergency UI programs they had previously supported while rejecting Republican amendments to prevent fraud. During consideration of ARPA in Committee, Democrats rejected Republican amendments that would have stopped the "pay and chase" model of benefit delivery. Rep. Devin Nunes (R-CA) offered an amendment to verify identity and prior wages of applicants prior to authorizing benefits, applied retroactively. Rep. Brad Wenstrup (R-OH) offered an amendment to hold harmless taxpayers that had their identities stolen to claim UI benefits fraudulently./13/ Most recently, in September 2022, Democrats voted against a Resolution of Inquiry demanding communications showing the DOL knowledge of UI benefits flowing to international crime syndicates./14/ Figure 2 provides a timeline of early warnings and calls for action.

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/13/Dissenting Views on Subtitle A. Budget Reconciliation Legislative Recommendations Relating to Crisis Support for Unemployed Workers, Committee on Ways and Means, February 16, 2021.

/14/"Democrats Vote to Blatantly Ignore Greatest Theft of American Tax Dollars in History," Ways and Means Republicans Press Release; September 27, 2022.

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The Biden Administration has offered few public details about its efforts to recover potentially hundreds of billions of stolen COVID-19 relief funds and issued guidance making it easy for states to sweep fraud under the rug. In February 2022, the Biden Administration issued guidance/15/ to let states off the hook for due diligence and fact finding for large volumes of suspicious claims--potentially involving billions of fraudulently obtained taxpayer dollars./16/ The guidance provides multiple loopholes for how "states may apply blanket waivers of recovery of overpayments." For example, a state may accept without challenge that an individual who responded "no" to being available for work is entitled to a waiver of recovery of overpayments with no determination as to whether the individual was truthful in their response. This allows those perpetrating fraud within the UI system to continue, and leaves hundreds of thousands of unresolved claims involving stolen identities belonging to identity theft victims, including first responders, government personnel, and school employees. In his 2022 State of the Union address, President Biden announced the creation of a "Chief Pandemic Prosecutor," saying "the watchdogs are back" and "we're going after the criminals who stole billions of relief money." On March 10, 2022, the Department of Justice announced the appointment of Associate Deputy Attorney General Kevin Chambers to serve as Director for COVID-19 Fraud Enforcement. Mr. Chambers was to lead criminal and civil enforcement activities to combat COVID-19 related fraud, however, Mr. Chambers left his position in December 2022, and this critical post remains unfilled.

/15/Unemployment Insurance Program Letter No. 20-21, Change 1, DOL, Employment and Training Administration, February 7, 2022.

/16/Ways and Means Republicans Letter to DOL Secretary Marty Walsh, February 22, 2022.

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The actual amount of unemployment fraud during the pandemic is not known. According to testimony provided to the Committee by DOL-OIG, improper payments in pandemic unemployment programs have left taxpayers on the hook for at least $191 billion, with a substantial portion due to fraud./17/ Outside experts put the number much higher at $400 billion./18/ Just over $5 billion has been recovered.

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/17/"Testimony before the U.S. House of Representatives Committee on Ways and Means," DOL-OIG, February 8, 2023.

/18/ID.Me. Insights Report, "Calculating the Road to Losing $400 Billion Dollars," January 20, 2022.

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Figure 3 shows that 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. A December report from GAO, requested by Committee Republicans, found at least $60 billion solely in fraud./19/ According to the report, "available estimates provide additional evidence of substantial levels of UI fraud and potential fraud during the pandemic, but none completely or reliably indicates the extent of fraud in UI programs." The extent of the theft is so great that GAO has committed to build on existing evidence with its own independent modeling to calculate a more precise estimate.

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/19/GAO, "UNEMPLOYMENT INSURANCE: Data Indicate Substantial Levels of Fraud during the Pandemic; DOL Should Implement an Antifraud Strategy," GAO-23-105523; December 2022.

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The White House estimated a 22.2 percent improper payment rate in the federal-state UI program in fiscal year 2022. This partial estimate does not include estimates of improper payments in the PUA program. DO-OIG identified PUA as the most susceptible to fraud due to its reliance on self-certification. Pre-pandemic improper payment levels for regular state UI programs were between 10-13 percent largely due to failure of individuals to comply with work search requirements, payments to individuals who returned to work, and failure of employers to provide timely information about individual's reason for separation from employment.

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This Committee has a responsibility to conduct oversight, take action to prevent future fraud, and bring restitution for taxpayers in the face of such staggering amounts of fraud. UI fraud has put American families in a terrible position, and taxpayers expect Congress to go after and recover every single possible dollar that was stolen by criminals and international crime rings. This legislation is needed to recover stolen taxpayer money, help ensure fraud risks do not carry over into the regular UI program and help bring to justice those who committed these crimes.

C. Legislative History

Background

H.R. 1163 was introduced on February 24, 2023, and was referred to the Committee on Ways and Means.

Committee hearings

On February 8, 2023, the Committee on Ways and Means held a hearing titled "The Greatest Theft of Taxpayer Dollars: Unchecked Unemployment Fraud." The purpose of the hearing was to investigate the size and scope of fraud in federal unemployment programs, which skyrocketed during the pandemic. The witnesses were Mr. Gene Dodaro, Comptroller General, GAO; Mr. Larry Turner, Inspector General, DOL-OIG; and Mr. Michael Horowitz, Director, Pandemic Response Accountability Committee (PRAC).

Committee action

The Committee on Ways and Means marked up H.R. 1163, the "Protecting Taxpayers and Victims of Unemployment Fraud Act," on February 28, 2023, and ordered the bill, as amended, favorably reported (with a quorum being present) by a vote of 20 yeas and 17 nays.

D. Designated Hearing

Pursuant to clause 3(c)(6) of rule XIII, the following hearing was used to develop and consider H.R. 1163: Committee on Ways and Means hearing which took place on February 8, 2023, entitled "The Greatest Theft of Taxpayer Dollars: Unchecked Unemployment Fraud".

II. EXPLANATION OF THE BILL

A. The Protecting Taxpayers and Victims of Unemployment Fraud Act Section 1: Short title PRESENT LAW No provision.

EXPLANATION OF PROVISION

This section provides the short title, "Protecting Taxpayers and Victims of Unemployment Fraud Act".

REASON FOR CHANGE

The Committee believes the title accurately reflects the content of the bill.

EFFECTIVE DATE

Upon enactment.

Section 2. Recovering federal fraudulent COVID unemployment payments PRESENT LAW

The CARES Act requires states to recoup overpayments from individuals that received a payment to which they were not entitled through offsets to UI benefits for up to a three-year period. The exception to this policy is PUA, which otherwise follows overpayment recovery rules at 20 CFR Part 625 applicable to the Disaster Unemployment Assistance (DUA) program administered by the Federal Emergency Management Agency. DUA does not have a time limit for benefit offset recovery.

EXPLANATION OF PROVISION

This section amends the CARES Act to allow states to retain 25 percent of any recovered fraudulent overpayments of pandemic unemployment funds from PUA, FPUC, PEUC, and MEUC. The section also applies this policy to EB and the first week of regular unemployment compensation during the period in which such benefits were 100 percent federally funded.

The section provides that states may use recovered funds for the following purposes: modernizing unemployment systems and information technology to improve verification and validation of applicants; administrative costs incurred by the state to identify and pursue recovery of fraudulent payments; hiring fraud investigators and prosecutors; and other program integrity activities as determined by the state to deter, detect, and prevent improper payments.

This section also extends the period to recoup overpayments through benefit offsets from three to 10 years for FPUC, PEUC, and MEUC, and adds a benefit offset period of 10 years to PUA.

REASON FOR CHANGE

Under current law, states have little incentive to pursue costly investigations and prosecutions that do not pay out to states. States otherwise must spend state funds to recover federal dollars that must be returned to the UTF account at Treasury, with no reimbursement of administrative costs incurred to recover such funds. In addition, many states are in the process of re-evaluating their UI technology and making systems enhancements to strengthen program integrity. Ensuring states invest in systems to prevent further instances of fraud is the best way this Committee can protect taxpayers and future UI recipients. These provisions provide a potential source of funding for those efforts. Finally, many states have laws in place to recover unemployment benefit overpayments through offsetting benefit policies. In recognition of the size and scope of pandemic UI fraud, and the time it takes to investigate and prosecute cases, the provision extends this period to 10 years.

EFFECTIVE DATE

The section becomes effective on or after the date of enactment and no later than 10 years from the date the amount was fraudulently received by an individual.

Section 3. Permissible uses of unemployment fund for program administration

PRESENT LAW

There is no provision in current law for states to retain a percentage of recovered UI overpayments. Under current law, states must re-deposit any recovered overpayments of regular state unemployment funds directly into their state trust fund account in compliance with the withdrawal standard and immediate deposit requirements in Section 3304(a) of Title 26 of the Internal Revenue Code and Section 303(a) of the Social Security Act.

EXPLANATION OF PROVISION

This section allows states to retain five percent of funds recovered from overpayments made (that are not the result of agency error) for use in the administration of the state's regular unemployment compensation program. Currently, states must deposit recovered overpayments into their state unemployment trust fund.

The section provides that states may use funds for the following purposes: costs of deterring, detecting, and preventing improper payments; purposes relating to the proper classification of employees and application of state unemployment experience tax ratings; payments on a state loan from the UTF; modernizing the state's unemployment compensation technology infrastructure; and otherwise assisting the state in improving the timely and accurate administration of the state's unemployment compensation law.

This policy is contingent on a state certifying they meet UI data integrity conditions outlined in Section 4.

REASON FOR CHANGE

This provision provides an incentive for states to pursue recovery of regular state UI overpayments as a source of additional funding for the administration of the UI program and for strengthening program integrity to prevent future fraud and improper payments.

EFFECTIVE DATE

The provisions in this section shall apply to overpayments that are collected as a result of an investigation and assessment by the state agency after the two-year period beginning on the date of enactment, except that nothing shall prevent a state from amending its law before the end of the two-year period beginning on the date of enactment.

Section 4. Preventing unemployment compensation fraud through data matching

PRESENT LAW

No provision.

EXPLANATION OF PROVISION

As a condition to retain five percent of overpayments described in Section 3, this section requires a state to certify that they meet the following data matching integrity conditions: The state uses the Integrity Data Hub (IDH), a fraud alert center designated by DOL, or another system at the discretion of the state, to crossmatch unemployment claimants to prevent and detect fraud.

The state has established procedures for: Use the National Directory of New Hires (NDNH).

Use the State Information Data Exchange System (SIDES).

Prevent payment of unemployment benefits to incarcerated individuals.

Prevent payment of unemployment benefits to deceased individuals.

REASON FOR CHANGE

Ensuring states implement and certify systems to conduct data-matching of claimants before benefits are disbursed is vital to stop the "pay and chase" model of benefit delivery and ensure this level of fraud never happens again. The IDH helps states to identify people claiming benefits in multiple states and other emergent fraud schemes. The NDNH allows the state to verify when someone receiving unemployment becomes employed and to take timely action to ensure benefits are discontinued. The SIDES facilitates employer responses to state requests to verify an individual's previous employment. These provisions provide states with the resources needed to improve their systems for data matching, prevent fraud, and deliver benefits faster and more efficiently.

EFFECTIVE DATE

Upon enactment.

Section 5. Extension of emergency state staffing flexibility CURRENT LAW

Section 303(a)(1) of the Social Security Act provides that state law must include a provision for "[s]uch methods of administration relating to the establishment and maintenance of personnel standards on a merit basis." The responsibility for the establishment of these standards was transferred to the Office of Personnel Administration by the Intergovernmental Personnel Act of 1970 (Pub. L. 91-648). Standards for a merit system of personnel administration are codified at 5 C.F.R. 900.603.

Section 2106 of the CARES Act amends Section 4102(b) of the Emergency Unemployment Insurance Stabilization and Access Act of 2020, set out in Division D of the FFCRA (Pub. L. 116-127), to allow states to exercise emergency temporary flexibility of "personnel standards on a merit basis" through December 31, 2020, to respond to the spread of COVID-19. Such flexibility was limited to "engaging of temporary staff, rehiring of retirees or former employees on a non-competitive basis, and other temporary actions to quickly process applications and claims." The Consolidated Appropriations Act, 2021, including the Continued Assistance for Unemployed Workers Act of 2020 (Continued Assistance Act) at Division N, Title II, Subtitle A, was signed into law by the President on December 27, 2020. The Continued Assistance Act extended this temporary staffing flexibility to March 14, 2021. ARPA subsequently extended this flexibility through September 6, 2021.

EXPLANATION OF PROVISION

This section reinstates and extends flexibility for states to hire temporary staff on a non-competitive basis to identify, prosecute, and recover fraudulent unemployment compensation benefits through December 31, 2030.

REASON FOR CHANGE

States have used emergency flexibility to hire contractors to take on more critical roles over the course of the pandemic, from the initial surge of providing simple relief to more complicated fact finding. According to the Center for Accountability, Modernization, and Innovation, during the pandemic, 41 states used the staffing flexibility provided by the CARES Act,/20/ and state workforce agencies have repeatedly asked Congress to extend the states' authority to use contractors. In addition, the National Association of State Workforce Agencies endorses staffing flexibility. This provision ensures that states have maximum flexibility to utilize non-merit staff through December 31, 2030. The staffing flexibilities provided in the bipartisan CARES Act were vital for states to meet the sudden and drastic staffing needs to process UI benefits. Extending this flexibility is equally as vital to ensure states can staff up and have the manpower to go after these criminals that have defrauded the American people.

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/20/"Unemployment Insurance, Staffing Flexibility," Center for Accountability, Modernization, and Innovation (CAMI), updated May 2021.

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EFFECTIVE DATE

Upon enactment.

Section 6. Fraud enforcement harmonization

Current Law Current law includes a five-year statute of limitations for criminal charges or civil enforcement actions related to bank or wire fraud and is codified at 18 U.S.C. 3282.

EXPLANATION OF PROVISION

Extends the statute of limitations for criminal charges or civil enforcement action alleging that an individual engaged in fraud from five to 10 years after the offense was committed.

REASON FOR CHANGE

Initial UI payments under the CARES Act started going out in early 2020, nearly three years ago. This section extends the statute of limitations so criminals cannot get away with their crimes just because the clock runs out. This provision is similar to two laws enacted in 2022 to extend the statute of limitations for prosecuting criminals in relation to fraudulent overpayments in the Paycheck Protection Program (PPP)/21/ and the Economic Injury Disaster Loan (EIDL)/22/ programs, and was a recommendation made by PRAC in testimony provided to the Committee on Ways and Means.

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/21/The "PPP and Bank Fraud Enforcement Harmonization Act of 2022," (P.L. 117-166).

/22/The "COVID-19 EIDL Fraud Statute of Limitations Act of 2022," (P.L. 117-327).

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Section 7. Budget offset

CURRENT LAW

Section 2118 of the CARES Act, as amended by ARPA, provided DOL $2 billion in funding "to detect and prevent fraud, promote equitable access, and ensure the timely payment of benefits with respect to unemployment compensation programs." EXPLANATION OF PROVISION This provision repeals Section 2118 of the CARES Act, as amended by ARPA.

REASON FOR CHANGE

This provision has the practical effect of rescinding approximately $400 million in unobligated funds remaining from the allocation provided in Section 2118. DOL has yet to provide a full accounting of this funding and failed to respond to a letter from Committee Republicans sent in May 2021 inquiring about the lack of focus on recovering fraud./23/ Available information shows DOL has used only approximately $365 million, or 18 percent, of the $2 billion provided for fraud identification and recovery.

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/23/Letter: "Brady, Crapo to Labor Secretary Walsh: Stop Unemployment Fraud Now: Top Republican leaders urge greater protection of hardworking taxpayer dollars," May 10, 2021.

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EFFECTIVE DATE

Upon enactment.

(Continues with Part 2 of 2)

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The report is posted at: https://www.congress.gov/congressional-report/118th-congress/house-report/34/1

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