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H.R. 4190: Pandemic Unemployment Assistance Fraud Protection Act


The text of the bill below is as of Jun 25, 2021 (Introduced).


I

117th CONGRESS

1st Session

H. R. 4190

IN THE HOUSE OF REPRESENTATIVES

June 25, 2021

(for herself, Mr. McCarthy, Mr. Harder of California, Mr. Lamborn, Mr. LaMalfa, Mr. Nunes, Mr. Issa, Mr. Garcia of California, Mr. Calvert, Mr. McClintock, and Mr. Van Drew) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To impose anti-fraud requirements with respect to certain unemployment benefits authorized under the CARES Act, and for other purposes.

1.

Short title

This Act may be cited as the Pandemic Unemployment Assistance Fraud Protection Act.

I

Taxpayer and Unemployed Worker Protection

101.

State anti-fraud requirements

(a)

In general

Section 2118 of the CARES Act (15 U.S.C. 9034) is amended—

(1)

in subsection (b)(3), by inserting the development and implementation of a recovery plan and the establishment of an anti-fraud task force as described in subsection (d) and after including;

(2)

by adding at the end the following:

(d)

Anti-Fraud requirements

(1)

In general

As a condition of receiving a grant under subsection (b)(3), the Secretary of Labor shall require that each State or territory receiving such a grant take the following actions:

(A)

Recovery plan

Not later than 30 days after the date of enactment of this subsection, each such State or territory shall submit to the Secretary of Labor a plan to recover all amounts of pandemic unemployment assistance paid under section 2102 to individuals who fraudulently obtained such assistance.

(B)

Task force

Not later than 90 days after the date of enactment of this subsection, each such State or territory shall establish an anti-fraud task force to investigate and recover amounts described in paragraph (1), and to develop a strategy for the implementation of the plan described in such paragraph. Such task force shall seek the cooperation of relevant entities in the State or territory, including local law enforcement, State law enforcement, and the State Office of the Inspector General.

(C)

Reports by State or territory

(i)

In general

At such times and in such manner as the Secretary of Labor may provide, each such State or territory shall submit to the Secretary of Labor a report specifying the ratio (expressed as a percentage) of—

(I)

amounts described in paragraph (1) that have not been recovered as of the date of such report, to

(II)

the total amounts of pandemic unemployment assistance that have been paid to individuals under section 2102 by such State or territory.

(ii)

Enforcement

In any case in which the Secretary of Labor determines that a State or territory has failed to submit any report under clause (i), section 1202(b)(10)(A) of the Social Security Act shall not apply with respect to such State or territory for any period after the date of such failure.

(2)

Reports by Secretary of Labor

(A)

Relating to State recovery plans

Not later than 45 days after the date of enactment of this subsection, the Secretary of Labor, in consultation with the Secretary of the Treasury, shall provide Congress with each plan submitted under paragraph (1)(A) and shall certify which such States and territories have submitted such a plan.

(B)

Relating to State reporting

(i)

In general

For each month beginning after the date of enactment of this subsection and ending on or before the termination date specified in clause (ii), the Secretary of Labor shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report that includes, subject to clause (ii), the percentage described in paragraph (1)(C)(i) for each State or territory that has received a grant under subsection (b)(3).

(ii)

Termination date

The termination date specified in this clause is the earlier of December 31, 2025, or, with respect to each State or territory required to submit reports under paragraph (1)(C), the date of the first such report in which the percentage specified in such report does not exceed 5 percent.

.

(b)

Authorization of funds for Federal law enforcement

There are authorized to be appropriated to the Attorney General $50,000,000 for each of fiscal years 2022 and 2023 for purposes of partnering with State anti-fraud task forces and State and local law enforcement to implement section 2118(d) of the CARES Act.

102.

Recovery of overpayments attributable to fraud

(a)

Recovery of overpayments by the Treasury

(1)

In general

Section 2102(f)(3) of the CARES Act (15 U.S.C. 9021(f)(3)) is amended by adding at the end the following: In any case in which a State agency makes an overpayment of assistance to any individual under an agreement under this section, the State shall make restitution to the Secretary for the amount of such overpayment..

(2)

Effective date

The amendments made by paragraph (1) shall take effect as if included in the enactment of the CARES Act (Public Law 116–136).

(b)

Processing fee for unrecovered overpayments attributable to fraud

(1)

In general

Section 3304(a) of the Internal Revenue Code of 1986 is amended—

(A)

in paragraph (4), by striking and at the end of subparagraph (F), by inserting and at the end of subparagraph (G), and by adding at the end the following:

(H)

amounts may be withdrawn for the payment of fees in accordance with paragraph (19);

; and

(B)

by striking and at the end of paragraph (18), by redesignating paragraph (19) as paragraph (20), and by inserting after paragraph (18) the following:

(19)

in the case of any State that fails to recover at least 75 percent of amounts of pandemic unemployment assistance paid to individuals who fraudulently obtained such assistance under section 2102 of the CARES Act prior to December 31, 2022, the payment of a processing fee to the Secretary of the Treasury, for each withdrawal made from the unemployment fund of the State, in a total amount equal to the amounts of such assistance unrecovered as of such date, to be amortized, as determined by the Secretary of Labor, over a 5-year period beginning on January 1, 2023, except that in no case may the method governing the computation of regular compensation (as defined in section 205(2) of the Federal-State Extended Unemployment Compensation Act of 1970) under the State law be modified in a manner such that the number of weeks, or the average weekly benefit amount, of regular compensation (as so defined) which will be payable after any such withdrawal be less than the number of weeks, or the average weekly benefit amount, of the average weekly benefit amount of regular compensation (as so defined) which would otherwise have been payable at such time under the State law, as in effect on January 1, 2020; and

.

(2)

Conforming amendment to Social Security Act

Section 303(a)(5) of the Social Security Act (42 U.S.C. 503(a)(5)) is amended by striking ; and at the end and inserting : Provided further; That amounts may be withdrawn for the payment of fees in accordance with paragraph (19) of section 3304(a) of the Internal Revenue Code of 1986.

II

Payments for Entitled Americans and Anti-Fraud

201.

State cross-check requirements

(a)

In general

Section 2102(f) of the CARES Act (15 U.S.C. 9021(f)) is amended by adding at the end the following:

(4)

Comparing information for fraud prevention

As a condition of any agreement under this section, a State shall—

(A)

enter into an agreement with the Attorney General under which the list of individuals receiving pandemic unemployment assistance under this section shall be regularly compared with a list of each prisoner in Federal custody at a Federal correction facility within that State;

(B)

establish a regular comparison of such list of individuals with a list of each prisoner in the custody of that State at a correctional facility in that State;

(C)

participate in the E-Verify Program described in section 403 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (division C of Public Law 104–208; 8 U.S.C. 1324a note) with respect to applicants for pandemic unemployment assistance; and

(D)

use the results of the comparisons and participation described in subparagraphs (A), (B), and (C) to investigate and prosecute fraud relating to pandemic unemployment assistance under this section.

.

(b)

Effective date

The amendment made by subsection (a) shall apply with respect to pandemic unemployment assistance paid under section 2102 of the CARES Act on or after the date of enactment of this Act.

202.

Temporary enhanced penalties for fraud and identity theft

Any violation of section 1341 or 1343 of title 18, U.S.C., occurring in connection with an application for, or continuing receipt of, pandemic unemployment assistance under section 2102 of the CARES Act (15 U.S.C. 9021) during the period beginning on the date of enactment of this Act and ending on December 31, 2021, shall be treated, for purposes of the final sentence of section 1341 or 1343 of such title, as a violation of such section 1341 or 1343 in relation to a presidentially declared major disaster or emergency.

203.

Protections relating to tax liability

(a)

In general

Section 2118 of the CARES Act (15 U.S.C. 9034), as amended by section 101(a), is further amended—

(1)

in subsection (b)(3), by striking the period at the end and inserting : Provided, That up to 10 percent of the amount made available under subsection (a) may be used, pursuant to a grant described in this paragraph, for the establishment of the fraud hotline and claim processing procedures described in subsection (e).; and

(2)

by adding at the end the following:

(e)

Protections relating to tax liability

(1)

In general

As a condition of receiving a grant under subsection (b)(3), the Secretary of Labor shall require that each State or territory receiving such a grant take the following actions, at such times and in such manner as the Secretary of Labor may provide:

(A)

Fraud hotline

Each such State or territory shall establish a fraud hotline designed to encourage individuals who are the victims of unemployment fraud and who have received an incorrect statement of unemployment compensation furnished under section 6050B of the Internal Revenue Code of 1986 for a calendar year to report such fraud to the State or territory.

(B)

Processing of claims

Each such State or territory shall—

(i)

maintain a database of all reports made as described under paragraph (1);

(ii)

investigate and make a final determination with respect to each such report;

(iii)

notify the Commissioner of Internal Revenue—

(I)

of each such report received with respect to an individual for a calendar year; and

(II)

of the final determination made with respect to such report.

(2)

Report to Congress

Not later than 90 days after the date of enactment of this subsection, the Secretary of Labor, in consultation with the Secretary of the Treasury, shall submit a report to Congress certifying whether each State or territory receiving a grant under subsection (b)(3) has taken the actions described in paragraph (1).

.

(b)

Timeliness of tax refunds

If the Commissioner of Internal Revenue is notified by a State that an individual has filed a report under section 2118(e) of the CARES Act with respect to an incorrect statement of unemployment compensation furnished under section 6050B of the Internal Revenue Code of 1986—

(1)

the Commissioner shall not delay making any refund with respect to a return of tax by such individual solely on account of a difference between the amount of unemployment compensation included on such return and furnished on such statement; and

(2)

except as otherwise provided in section 6851 or 6861 of such Code, no assessment of any portion of a deficiency that is attributable to such any difference may be made,

unless such delay or assessment is based on the final determination made by the State with respect to such report.