Debate could tackle fraud, unemployment fund debt
State senators are expected to take up a bill that would waive $130 million in taxes owed on forgiven federal Paycheck Protection Program loans today, but several amendments would also address the fraud and massive debt racking up in the state’s unemployment trust fund.
Amendments submitted by Senate Minority Leader Bruce Tarr, R-Gloucester, would raise fees on criminals who submit fraudulent unemployment claims — after large amounts of illegitimate unemployment claims clogged the state system amid the pandemic — and direct federal COVID-19 relief funds to cover some of the fund’s billions of debt. “While we are moving on legislation to help employers with the cost of making sure the Unemployment Trust Fund has the resources to help people depending on it, we should also take action to confront the fraudsters who attempt to steal money from the fund through false claims,” Tarr said in a statement to the Herald.
Tarr’s amendment would increase penalties for instances of fraud, raising fines from $1,000 to $5,000 and increasing the maximum penalties on businesses that fail to pay into the fund or refuse to pay benefits.
The House last week unanimously advanced the bill senators will take up today. Their bill would freeze unemployment rates for two years, give tax breaks to some jobless workers, and extend paid leave benefits amid the coronavirus pandemic in addition to waiving taxes on PPP loans.
The ongoing unprecedented draw on unemployment benefits has pushed the state’s unemployment trust fund nearly $2.4 billion in arrears as of January, state data shows. The fund will be more than $4.7 billion in debt by the end of 2021, according to state projections.
Already the state has borrowed $2.2 billion to cover unemployment obligations, and Retailer’s Association of Massachusetts President Jon Hurst worries the burden of paying back that debt will be put on the backs of the state’s businesses.
“What’s troubling in my mind that this is an amortization of the debt,” Hurst said. “It doesn’t relieve employers of the debt and there is a real question of whether 100% of that debt should be on the shoulders of businesses.”
Another Tarr amendment would authorize the use of some of the $8 billion in federal COVID-19 relief funds headed to the state through the $1.9 trillion American Rescue Plan.