Robert J. Fedor, Esq., L.L.C.

Ohio unemployment benefits may lead to tax audits

During a time of uncertainty and losing jobs, many people filed for unemployment benefits. However, the Ohio Department of Job and Family Services did audits and are planning on offsetting tax refunds for benefits received that were allegedly not due to recipients. According to reports, the agency is set to receive approximately $70 million back in collected state and federal benefits.

In 2013, the state reportedly paid out approximately $1.8 billion in unemployment benefits. The intercept of federal taxes is being done through the United States Treasury Offset Program, which is a collaboration between the IRS and state agencies. The agency is considering the undue benefits as fraud debt.

An attorney with the National Employment Law Project claims that just because the debt is not collected does not necessarily mean it's fraud -- it could simply be overpayment. Some of these examples include those who receive unemployment benefits from job loss that was not a result of being laid off. In many instances, the agency later discovers that the individual was not eligible to receive benefits, which means the person needs to pay the funds back.

Understandably, tax fraud is not acceptable behavior in Ohio or any other state. However, just because someone was overpaid, or perhaps was not entitled to receive benefits in the first place, does not mean the person committed fraud. In cases where individuals are required to repay the money, the agency intercepts federal tax returns if it has not been voluntarily repaid within a certain time period. Gaining knowledge of unemployment benefits and tax laws may reduce the chance for audits in the long-run.

Source:, Ohio will seize federal tax refunds of people who collected unemployment benefits not owed to them, Olivera Perkins, Feb. 14, 2014

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