Combatting COVID Unemployment Fraud Act of 2021
This bill requires additional documentation for individuals seeking pandemic unemployment assistance, requires state unemployment agencies to use designated fraud prevention tools, and otherwise addresses pandemic-related unemployment benefits.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3268 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 3268
To prevent fraud in COVID unemployment programs, recover fraudulently
paid benefits, provide relief for taxpayers and victims of unemployment
fraud, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 17, 2021
Mr. Brady (for himself, Mr. Reed, Mrs. Walorski, Mr. Kelly of
Pennsylvania, Mr. Rice of South Carolina, Mr. Smucker, Mrs. Miller of
West Virginia, Mr. Wenstrup, Mr. Schweikert, Mr. LaHood, Mr. Ferguson,
Mrs. Steel, Mr. Nunes, Mr. Hern, Mr. Estes, Mr. Smith of Nebraska, and
Mr. McCarthy) introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To prevent fraud in COVID unemployment programs, recover fraudulently
paid benefits, provide relief for taxpayers and victims of unemployment
fraud, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Combatting COVID Unemployment Fraud
Act of 2021''.
SEC. 2. PREVENTING FRAUD IN PANDEMIC UNEMPLOYMENT ASSISTANCE.
(a) Verification of Eligibility for Pandemic Unemployment
Assistance Prior to Authorizing Benefits.--
(1) In general.--Section 2102 of the CARES Act (15 U.S.C.
9021) is amended--
(A) in subsection (a)(3)(A)--
(i) in clause (ii)--
(I) in the matter preceding
subclause (I), by striking ``provides
self-certification'' and inserting
``provides, not later than 30 days
after the date of application, such
documentation as the State may require,
demonstrating'';
(II) in subclause (I), in the
matter preceding item (aa), by
inserting ``in the employment or
service described in clause (iv)''
after ``unavailable to work''; and
(III) in subclause (II), by
striking ``and'' at the end;
(ii) by amending clause (iii) to read as
follows:
``(iii)(I) provides, not later than 30 days
after the date of application and prior to the
authorization of pandemic unemployment
assistance, such documentation as the State
agency may require (in accordance with section
625.6(e) of title 20, Code of Federal
Regulations, or any successor thereto, except
with respect to the deadline for submission) to
substantiate prior employment or self-
employment or the planned commencement of
employment and earnings, as applicable, except
that the deadline for submission may be
extended if the individual has shown good cause
under applicable State law that justifies a
delay in submitting such documentation; and
``(II) provides documentation to the
satisfaction of the State agency, or the entity
verifying identify on behalf of the State
agency, verifying the individual's identity
prior to authorizing benefits; and''; and
(iii) by adding at the end the following:
``(iv) provides self-certification that the
principal source of income and livelihood of
the individual are dependent upon the
individual's employment for wages or the
individual's performance of service in self-
employment; and''.
(B) in subsection (f)(1), by inserting ``prior to
authorizing benefits'' after ``validation''; and
(C) in subsection (f)(2)(B), by striking the period
at the end and inserting at the end the following: ``:
Provided, That such expenses shall be claimed by States
on a reimbursable basis and shall not be subject to
restrictions imposed by the Department of Labor's
resource justification model.''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to individuals who apply for pandemic unemployment
assistance on or after the date that is 30 days after the date
of enactment of this Act
(b) Limitation on Backdating Claims for Pandemic Unemployment
Assistance.--In the case of a covered individual whose first
application for pandemic unemployment assistance under section 2102 of
the CARES Act is filed after the date of enactment of this Act,
subsection (c)(1)(A)(i) of such section 2102 of the CARES Act shall be
applied by substituting ``April 1, 2021'' for ``January 27, 2020''.
(c) Application Deadline for Pandemic Unemployment Assistance.--
Subsection (c) of section 2102 of the CARES Act (15 U.S.C. 9021) is
amended by adding at the end the following:
``(7) Application deadline.--Notwithstanding any other
provision of this subsection, no application for pandemic
unemployment assistance may be filed after the date that is 14
days after the date specified in paragraph (1)(A)(ii) unless
the individual has shown good cause under the applicable State
law for failing to file before such date.''.
(d) Issuance of Guidance.--Section 2102 of the CARES Act (15 U.S.C.
9021) is amended by adding at the end the following:
``(i) Department of Labor Guidance on Verification of Eligibility
for Pandemic Unemployment Assistance Prior to Authorizing Benefits.--
Not later than 60 days after the enactment of this subsection, the
Secretary of Labor, in consultation with the Director of the National
Institute of Standards and Technology, shall issue guidance to State
workforce agencies outlining the latest industry practices with regard
to cybersecurity, digital identity proofing services, standards for
privacy, and procedures for verifying and validating the identity of
individuals, pursuant to subsection (f)(1), and the availability of
third-party income verification technology to prevent fraud in the
pandemic unemployment assistance program.''.
SEC. 3. LIMITATION ON PAYMENTS OF FEDERAL PANDEMIC UNEMPLOYMENT
COMPENSATION.
Subsection (b) of 2104 of the CARES Act (15 U.S.C. 9023) is amended
by adding at the end the following:
``(5) Limitation.--Notwithstanding any other provision of
this subsection, no Federal pandemic unemployment compensation
may be paid retroactively for a week of unemployment to
claimants who apply for regular compensation for such week more
than 14 days after the dates specified in clauses (i) and (ii)
of subsection (b)(3)(A) with respect to such week.''.
SEC. 4. PREVENTING UNEMPLOYMENT COMPENSATION FRAUD AND IMPROPER
PAYMENTS THROUGH DATA MATCHING.
(a) Unemployment Compensation Data Integrity Hub.--
(1) In general.--Section 303(a) of the Social Security Act
(42 U.S.C. 503(a)) is amended by adding at the end the
following:
``(13) The State agency charged with administration of the
State law shall use the system designated by the Secretary of
Labor for cross-matching claimants of unemployment compensation
under State law against any databases in the system to prevent
and detect fraud and improper payments.''.
(b) Use of Unemployment Claims Data to Prevent and Detect Fraud.--
Section 303 of the Social Security Act (42 U.S.C. 503) is amended by
adding at the end the following:
``(n) Use of Unemployment Claims Data to Prevent and Detect
Fraud.--The Inspector General of the Department of Labor shall, for the
purpose of conducting audits, investigations, and other oversight
activities authorized under the Inspector General Act of 1978 (5 U.S.C.
App.) relating to unemployment compensation programs, have direct
access to each of the following systems:
``(1) The system designated by the Secretary of Labor for
the electronic transmission of requests for information
relating to interstate claims for unemployment compensation.
``(2) The system designated by the Secretary of Labor for
cross-matching claimants of unemployment compensation under
State law against databases to prevent and detect fraud and
improper payments (as described in subsection (a)(13)).''.
(c) Use of Fraud Prevention and Detection Systems in Administration
of Unemployment Compensation Programs.--
(1) In general.--Section 303 of the Social Security Act (42
U.S.C. 503), as amended by subsection (b), is further amended
by adding at the end the following:
``(o) State Use of Fraud Prevention and Detection Systems.--
``(1) In general.--The State agency charged with
administration of the State law shall establish procedures to
do the following:
``(A) National directory of new hires.--Use the
National Directory of New Hires established under
section 453(i)--
``(i) to compare information in such
Directory against information about individuals
claiming unemployment compensation to identify
any such individuals who may have become
employed, in accordance with any regulations
that the Secretary of Health and Human Services
may issue and consistent with the computer
matching provisions of the Privacy Act of 1974;
``(ii) to take timely action to verify
whether the individuals identified pursuant to
clause (i) are employed; and
``(iii) upon verification pursuant to
clause (ii), to take appropriate action to
suspend or modify unemployment compensation
payments, and to initiate recovery of any
improper unemployment compensation payments
that have been made.
``(B) State information data exchange system.--Use
the Department of Labor's State Information Data
Exchange System to facilitate employer responses to
requests for information from State workforce agencies.
``(C) Incarcerated individuals.--Seek information
from the Commissioner of Social Security under sections
202(x)(3)(B)(iv) and 1611(e)(1)(I)(iii), and from such
other sources as the State agency determines
appropriate, to obtain the information necessary to
carry out the provisions of a State law under which an
individual who is confined in a jail, prison, or other
penal institution or correctional facility is
ineligible for unemployment compensation on account of
such individuals inability to satisfy the requirement
under subsection (a)(12).
``(D) Deceased individuals.--Compare information of
individuals claiming unemployment compensation against
the information regarding deceased individuals
furnished to or maintained by the Commissioner of
Social Security under section 205(r).
``(2) Enforcement.--Whenever the Secretary of Labor, after
reasonable notice and opportunity for hearing to the State
agency charged with the administration of the State law, finds
that the State agency fails to comply substantially with the
requirements of paragraph (1), the Secretary of Labor shall
notify such State agency that further payments will not be made
to the State until the Secretary of Labor is satisfied that
there is no longer any such failure. Until the Secretary of
Labor is so satisfied, such Secretary shall make no future
certification to the Secretary of the Treasury with respect to
such State.
``(3) Unemployment compensation.--For the purposes of this
subsection, any reference to unemployment compensation
described in this paragraph shall be considered to refer to--
``(A) regular or extended compensation (as defined
by section 205 of the Federal-State Extended
Unemployment Compensation Act of 1970);
``(B) regular compensation (as defined by section
85(b) of the Internal Revenue Code of 1986) provided
under any program administered by a State under an
agreement with the Secretary;
``(C) pandemic unemployment assistance under
section 2102 of the Relief for Workers Affected by
Coronavirus Act (15 U.S.C. 9021);
``(D) pandemic emergency unemployment compensation
under section 2107 of the Relief for Workers Affected
by Coronavirus Act (15 U.S.C. 2025); and
``(E) short-time compensation under a short-time
compensation program (as defined in section 3306(v) of
the Internal Revenue Code of 1986).''.
(d) Effective Date.--The amendments made by subsections (a) and (c)
shall take effect with respect to each State to weeks of unemployment
beginning on or after the earlier of--
(1) the date the State changes its statutes, regulations,
or policies in order to comply with such amendment; or
(2) October 1, 2022.
SEC. 5. RECOVERING FRAUDULENT COVID UNEMPLOYMENT COMPENSATION BENEFIT
PAYMENTS.
(a) State Unemployment Fraud Recoupment Plans.--
(1) In general.--Section 2118(b)(3) of the CARES Act (15
U.S.C. 9034(b)(3)) is amended to read as follows:
``(3) to make grants to States or territories administering
unemployment compensation programs described in subsection (a)
(including territories administering the Pandemic Unemployment
Assistance program under section 2102) for such purposes,
including for--
``(A) building State capacity to prevent and reduce
unemployment fraud through--
``(i) the procurement of technology
capabilities and building of infrastructure to
verify and validate identity and earnings of
unemployment compensation claimants;
``(ii) the establishment of procedures to
implement Federal guidance regarding prevention
of overpayments and fraud detection and
prevention; and
``(iii) improving the efficiency and
integrity of claims administration or
processing of claims backlogs due to the
pandemic; and
``(B) the development and implementation of State
unemployment fraud recoupment plans, which shall
include--
``(i) an assessment of the amount and
extent of fraudulently paid unemployment
benefits in 2020 and 2021, as applicable;
``(ii) an explanation of the causes of
fraudulent payments, including any weaknesses
in the State's internal control procedures;
``(iii) a description of State efforts to
recover fraudulent unemployment payments;
``(iv) a description of State actions taken
to reduce and prevent fraudulent payments; and
``(v) the identification of additional
resources or authority needed to facilitate
recovery of fraudulently paid benefits; and
``(C) targeted funding to support State efforts to
claw back fraudulent payments, which may be done by an
independent third party contracted by the State,
through State prosecution of criminal unemployment
fraud schemes in coordination with Federal law
enforcement officials, as applicable.''.
(2) Reservation of funds.--Section 2118(a) of the CARES Act
(15 U.S.C. 9034(a)) is amended by adding at the end the
following: ``Of the amount made available under this
subsection, not less than $200,000,000 shall be used for grants
to States or territories as described in subsection (b)(3)''.
(3) Effective date.--Not later than 60 days after the date
of enactment of this Act, each State with an agreement under
section 2102 of the CARES Act shall, as a condition of such
agreement, submit to the Secretary of Labor and make publicly
available a State unemployment fraud recoupment plan as
described in section 2118(b)(3)(B) of such Act.
(b) Establishment of the COVID Unemployment Fraud Taskforce.--
Section 2118 of the CARES Act (15 U.S.C. 9034) is amended by adding at
the end the following:
``(d) Establishment of the COVID Unemployment Fraud Taskforce.--
``(1) In general.--Not later than 30 days after the date of
enactment of this paragraph, the Secretary of Labor, the
Attorney General, and the Secretary of Homeland Security shall
establish a joint taskforce, to be known as the `COVID
Unemployment Fraud Taskforce', to combat fraud in unemployment
compensation programs. The taskforce shall--
``(A) coordinate and support State and Federal
unemployment insurance fraud detection;
``(B) identify fraud prevention tools and make them
available to States at no cost or substantially reduced
cost;
``(C) take the lead with respect to violations of
Federal law on prosecution of individuals suspected of
unemployment fraud;
``(D) facilitate information sharing regarding
unemployment fraud, particularly with regard to
international and multi-State organized crime rings;
``(E) coordinate with State workforce agencies to
develop State unemployment fraud recoupment plans as
described in subsection (b)(3)(B); and
``(F) coordinate with the Internal Revenue Service
to assist taxpayers who were victims of unemployment
fraud.
``(2) State dashboard.--Not later than 60 days after the
date of enactment of this paragraph, the COVID Unemployment
Fraud Taskforce shall make available on a public website, and
shall update on a regular basis, a dashboard that shows the
status of each State's efforts to prevent fraud and recover
fraudulently paid funds, including the amount of overpayments,
prosecutions of unemployment fraud, and information provided by
each State pursuant to (b)(3)(B).
``(3) Reservation of funds.--Of the amount made available
under subsection (a), not less than $20,000,000 shall be used
for the administration and operations of the COVID Unemployment
Fraud Taskforce established under paragraph (1), including for
hiring of personnel to identify and combat fraud schemes
targeting State unemployment compensation systems.''.
(c) Allowing States to Retain Percentage of Overpayments for
Administration and Program Integrity.--The Department of Labor shall
issue guidance to States that allows State workforce agencies to retain
5 percent of any amounts recovered in fraudulent or improperly paid
State or Federal unemployment benefits made in 2020 or 2021 for use in
administration of the State's unemployment compensation program,
including for hiring fraud investigators and for other program
integrity purposes. Recovered amounts retained by a State and used for
the purposes described in this subsection shall not be considered to
violate the withdrawal requirements of section 303(a)(5) of the Social
Security Act or section 3304(a)(4) of the Internal Revenue Code of
1986.
SEC. 6. PROTECTIONS FOR TAXPAYERS AND VICTIMS OF UNEMPLOYMENT FRAUD.
(a) Assistance for Victims of Unemployment Fraud.--Section 2118 of
the CARES Act (15 U.S.C. 9034), as amended by section 5(b), is further
amended by adding at the end the following:
``(e) Assistance for Victims of Unemployment Fraud.--
``(1) In general.--The Department of Labor shall establish
an agreement with the Federal Trade Commission and other
identity theft victim resource centers, as applicable, to
assist victims of identity theft and unemployment fraud,
including assistance with individual case mitigation and victim
assistance.
``(2) Reservation of funds.--Of the amount made available
under subsection (a), not less than $2,000,000 shall be used
for the purposes described under paragraph (1).''.
(b) Relief for Taxpayers That Were Victims of Identity Theft to
Commit Unemployment Fraud.--The Commissioner of the Internal Revenue
Service, in collaboration with the Secretary of Labor, shall implement
a process to hold harmless taxpayers who are flagged for unreported
income related to Form 1099-G, Certain Government Payments, in taxable
years 2020 and 2021, if such taxpayer claims they are victims of
identity theft, or that fraudulent unemployment benefits were claimed
in their name, such that no penalties or interest shall accrue against
the taxpayer, while the matter is being investigated and resolved.
(c) Reporting Unemployment Compensation Overpayments.--
(1) In general.--The Secretary of Labor, through the Office
of Unemployment Insurance in the Employment and Training
Administration, shall collect data from each State on the
amounts of overpayments waived in unemployment compensation
programs, including a breakdown of overpayments waived and
excluded by each State from Form 1099-G, Certain Government
Payment during taxable years 2020 and 2021, due to suspected or
confirmed fraud.
(2) Report to congress.--Not later than 120 days after the
date of enactment of this Act, the Secretary of Labor shall
submit a report to the Committee on Ways and Means of the House
of Representatives and the Committee on Finance of the Senate
that describes the aggregate amount of overpayments nationally,
including the subset of overpayments made specifically due to
fraud, and detailed by program as applicable, including a
separate accounting for the pandemic unemployment assistance
program.
(3) Expedited collection.--The Secretary of Labor may waive
the requirements of subchapter I of chapter 35 of title 44,
United States Code (commonly referred to as the ``Paperwork
Reduction Act'') with respect to the provisions in the
amendments made by this Act.
(4) Applicability.--For purposes of this section, the term
``unemployment compensation'' shall be considered to refer to--
(A) regular compensation and extended compensation
(as such terms are defined by section 205 of the
Federal-State Extended Unemployment Compensation Act of
1970);
(B) unemployment compensation (as defined by
section 85(b) of the Internal Revenue Code of 1986)
provided under any program administered by a State
under an agreement with the Secretary;
(C) pandemic unemployment assistance under section
2102 of the CARES Act;
(D) pandemic emergency unemployment compensation
under section 2107 of the CARES Act; and
(E) short-time compensation under a short-time
compensation program (as defined in section 3306(v) of
the Internal Revenue Code of 1986).
SEC. 7. REINSTATING FEDERAL WORK SEARCH REQUIREMENT.
(a) In General.--Section 4102(b) of the Families First Coronavirus
Relief Act (26 U.S.C. 3304 note) is amended by striking ``work
search,'' after ``with respect to''.
(b) Effective Date.--The amendment made under subsection (a) shall
take effect on the date that is 30 days after the date of enactment of
this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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