Tax refunds help state recoup thousands in overpaid jobless benefits

The state’s Employment Security Department is saying the federal tax-filing season is turning into debt-repayment season for Washington residents who owe the department money.

The first two weeks of IRS disbursements netted $446,380 to the state agency from the Internal Revenue Service under the federal Treasury Offset Program, or TOP.

The program allows Employment Security to cross-match its computer files with IRS files and flag individuals who are delinquent in paying back benefit overpayments. The department can claim any tax refunds they have coming, after the IRS, delinquent child support and other federal debts are paid.

Additional disbursements will be issued each week.

“While this represents only a small dent in the total benefits debt, it sends a signal about the importance we place on running a fair and solvent unemployment-insurance system,” said Employment Security Commissioner Dale Peinecke, in a press release. “It’s a good start, and we expect to recoup even more through TOP in the months ahead.”

In December, Employment Security notified 25,000 people that their 2012 income-tax refunds might be intercepted to repay benefits they shouldn’t have received. At that time, they owed a total of $61.7 million in delinquent debt.

Many people being targeted through TOP claimed unemployment benefits fraudulently. Federal law also allows states to use TOP to recover benefits from people who didn’t disclose earnings they received while claiming benefits.

Later this year, employers with delinquent taxes will be added to Washington’s TOP review, in time for filing 2013 tax returns.

Washington is one of 31 states, plus the District of Columbia, currently approved to participate in TOP.

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