IB 

Union Calendar No. 21 

118TH CONGRESS 

1ST SESSION H. R. 1163 

[Report No. 118–34] 

To provide incentives for States to recover fraudulently paid Federal and 

State unemployment compensation, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 24, 2023 

Mr. SMITH of Missouri (for himself, Mr. BUCHANAN, Mr. FERGUSON, Mr. 

STEUBE, Mr. WENSTRUP, Mr. FEENSTRA, Mr. MOORE of Utah, Mr. 

SMUCKER, Mrs. MILLER of West Virginia, Mr. ESTES, Ms. VAN DUYNE, 

Mrs. STEEL, Ms. TENNEY, Ms. MALLIOTAKIS, Mr. CAREY, Mr. 

KUSTOFF, Mr. KELLY of Pennsylvania, Mr. FITZPATRICK, Mr. MURPHY, 

Mr. SMITH of Nebraska, Mrs. FISCHBACH, Mr. LAHOOD, Mr. 

SCHWEIKERT, Mr. ARRINGTON, Mr. COMER, and Mr. HERN) introduced 

the following bill; which was referred to the Committee on Ways and 

Means 

APRIL 6, 2023 

Additional sponsors: Mr. SESSIONS, Mr. POSEY, Mr. SANTOS, Ms. GREENE of 

Georgia, Mr. DONALDS, Mr. HILL, Mr. JACKSON of Texas, Mr. YAKYM, 

Mr. ROGERS of Alabama, and Mr. MAST

APRIL 6, 2023 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on February 24, 2023] 


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A BILL 

To provide incentives for States to recover fraudulently paid 

Federal and State unemployment compensation, and for 

other purposes. 


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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Protecting Taxpayers 

5 and Victims of Unemployment Fraud Act’’. 

6 SEC. 2. RECOVERING FEDERAL FRAUDULENT COVID UNEM7 PLOYMENT COMPENSATION PAYMENTS. 

8 (a) ALLOWING STATES TO RETAIN PERCENTAGE OF

9 OVERPAYMENTS FOR PROGRAM INTEGRITY.— 

10 (1) PANDEMIC UNEMPLOYMENT ASSISTANCE.— 

11 Section 2102(d) of the CARES Act (15 U.S.C. 

12 9021(d)) is amended by amending paragraph (4) to 

13 read as follows: 

14 ‘‘(4) FRAUD AND OVERPAYMENTS.—Section 

15 2107(e) shall apply with respect to pandemic unem16 ployment assistance under this section by substituting 

17 ‘pandemic unemployment assistance’ for ‘pandemic 

18 emergency unemployment compensation’ each place it 

19 appears in such section 2107(e).’’. 

20 (2) FEDERAL PANDEMIC UNEMPLOYMENT COM21 PENSATION.—Section 2104(f)(3) of such Act (15 

22 U.S.C. 9023(f)(3)) is amended— 

23 (A) in subparagraph (A)— 

24 (i) by striking ‘‘3-year’’ and inserting 

25 ‘‘10-year’’; and 


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1 (ii) by inserting ‘‘, except that a State 

2 may retain a percentage of any amounts re3 covered as described in subparagraph (C)’’ 

4 before the period at the end; and 

5 (B) by adding at the end the following: 

6 ‘‘(C) RETENTION OF PERCENTAGE OF RE7 COVERED FUNDS.—The State agency may retain 

8 25 percent of any amount recovered from over9 payments of Federal Pandemic Unemployment 

10 Compensation or Mixed Earner Unemployment 

11 Compensation that were determined to be made 

12 due to fraud. Amounts so retained by the State 

13 agency shall be used for any of following: 

14 ‘‘(i) Modernizing unemployment com15 pensation systems and information tech16 nology to improve identity verification and 

17 validation of applicants. 

18 ‘‘(ii) Reimbursement of administrative 

19 costs incurred by the State to identify and 

20 pursue recovery of fraudulent overpayments. 

21 ‘‘(iii) Hiring fraud investigators and 

22 prosecutors. 

23 ‘‘(iv) Other program integrity activi24 ties as determined by the State.’’; 


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1 (3) PANDEMIC EMERGENCY UNEMPLOYMENT

2 COMPENSATION.—Section 2107(e)(3) of such Act (15 

3 U.S.C. 9025(e)(3)) is amended— 

4 (A) in subparagraph (A)— 

5 (i) by striking ‘‘3-year’’ and inserting 

6 ‘‘10-year’’; and 

7 (ii) by inserting ‘‘, except that a State 

8 may retain a percentage of any amounts re9 covered as described in subparagraph (C)’’ 

10 before the period at the end; and 

11 (B) by adding at the end the following: 

12 ‘‘(C) RETENTION OF PERCENTAGE OF RE13 COVERED FUNDS.—The State agency may retain 

14 25 percent of any amount recovered from over15 payments of pandemic emergency unemployment 

16 compensation that were determined to be made 

17 due to fraud. Amounts so retained by the State 

18 agency shall be used for any of following: 

19 ‘‘(i) Modernizing unemployment com20 pensation systems and information tech21 nology to improve identity verification and 

22 validation of applicants. 

23 ‘‘(ii) Reimbursement of administrative 

24 costs incurred by the State to identify and 

25 pursue recovery of fraudulent overpayments. 


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1 ‘‘(iii) Hiring fraud investigators and 

2 prosecutors. 

3 ‘‘(iv) Other program integrity activi4 ties as determined by the State.’’. 

5 (4) EXTENDED UNEMPLOYMENT COMPENSA6 TION.—A State to which section 4105 of the Families 

7 First Coronavirus Response Act (26 U.S.C. 3304 

8 note) applied may retain 25 percent of any amount 

9 recovered from overpayments of sharable extended 

10 compensation and sharable regular compensation (as 

11 such terms are defined in section 204 of the Federal12 State Extended Unemployment Compensation Act of 

13 1970) paid for weeks of unemployment described in 

14 such section 4105 that were determined to be made 

15 due to fraud. Amounts so retained by the State agen16 cy shall be used for any of the purposes described in 

17 section 2107(e)(3)(C) of the CARES Act (15 U.S.C. 

18 9025(e)(3)(C)). 

19 (5) FIRST WEEK OF REGULAR COMPENSATION.— 

20 A State that was a party to an agreement under sec21 tion 4105 of the CARES Act (15 U.S.C. 9024) may 

22 retain 25 percent of any amount recovered from over23 payments of regular compensation paid to individ24 uals by the State for their first week of regular unem25 ployment for which the State received full Federal 


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1 funding under such agreement in any case in which 

2 such overpayments were determined to be made due to 

3 fraud. Amounts so retained by the State agency shall 

4 be used for any of the purposes described in section 

5 2107(e)(3)(C) of the CARES Act (15 U.S.C. 

6 9025(e)(3)(C)). 

7 (b) TREATMENT UNDER WITHDRAWAL STANDARD AND

8 IMMEDIATE DEPOSIT REQUIREMENTS.—Any amount re9 tained by a State pursuant to paragraph (4) or (5) of sub10 section (a) or under section 2102(d)(4), section 

11 2104(f)(3)(C), or 2107(e)(3)(C) of the CARES Act, and used 

12 for the purposes described therein, shall not be considered 

13 to violate the withdrawal standard and immediate deposit 

14 requirements of paragraph (4) or (5) of section 303(a) of 

15 the Social Security Act (42 U.S.C. 503(a)) or paragraph 

16 (3) or (4) of section 3304(a) of the Internal Revenue Code 

17 of 1986. 

18 (c) LIMITATION ON RETENTION AUTHORITY.—The au19 thority of a State to retain any amount pursuant to para20 graph (4) or (5) of subsection (a) and under section 

21 2102(d)(4), section 2104(f)(3)(C), and 2107(e)(3)(C) of the 

22 CARES Act shall apply only— 

23 (1) with respect to an amount recovered on or 

24 after the date of enactment of this Act; and 


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1 (2) during the 10-year period beginning on the 

2 date on which such amount was received by an indi3 vidual not entitled to such amount. 

4 SEC. 3. PERMISSIBLE USES OF UNEMPLOYMENT FUND FOR 

5 PROGRAM ADMINISTRATION. 

6 (a) WITHDRAWAL STANDARD IN THE INTERNAL REV7 ENUE CODE.—Section 3304(a)(4) of the Internal Revenue 

8 Code of 1986 is amended— 

9 (1) in subparagraph (F), by striking ‘‘and’’ after 

10 the semicolon; and 

11 (2) by inserting after subparagraph (G) the fol12 lowing new subparagraphs: 

13 ‘‘(H) provided the certifications made by 

14 the State as described in section 4 of the Pro15 tecting Taxpayers and Victims of Unemployment 

16 Fraud Act are in effect at the time of approval 

17 of the State law under this subsection, an 

18 amount, not to exceed 5 percent, of any overpay19 ment of compensation recovered by the State 

20 (other than an overpayment made as the result 

21 of agency error) may, immediately following the 

22 State’s receipt of such recovered amount, be de23 posited in a State fund from which money may 

24 be withdrawn for— 


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1 ‘‘(i) the payment of costs of deterring, 

2 detecting, and preventing improper pay3 ments; 

4 ‘‘(ii) purposes relating to the proper 

5 classification of employees and the provi6 sions of State law implementing section 

7 303(k) of the Social Security Act; 

8 ‘‘(iii) the payment to the Secretary of 

9 the Treasury to the credit of the account of 

10 the State in the Unemployment Trust Fund; 

11 ‘‘(iv) modernizing the State’s unem12 ployment insurance technology infrastruc13 ture; or 

14 ‘‘(v) otherwise assisting the State in 

15 improving the timely and accurate admin16 istration of the State’s unemployment com17 pensation law; and 

18 ‘‘(I) provided the certifications made by the 

19 State as described in section 4 of the Protecting 

20 Taxpayers and Victims of Unemployment Fraud 

21 Act are in effect at the time of approval of the 

22 State law under this subsection, an amount, not 

23 to exceed 5 percent, of any payments of contribu24 tions, or payments in lieu of contributions, that 

25 are collected as a result of an investigation and 


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1 assessment by the State agency may, imme2 diately following receipt of such payments, be de3 posited in a State fund from which moneys may 

4 be withdrawn for the purposes specified in sub5 paragraph (H);’’. 

6 (b) DEFINITION OF UNEMPLOYMENT FUND.—Section 

7 3306(f) of the Internal Revenue Code of 1986 is amended 

8 by striking ‘‘and for refunds of sums’’ and all that follows 

9 and inserting ‘‘, except as otherwise provided in section 

10 3304(a)(4), section 303(a)(5) of the Social Security Act, or 

11 any other provision of Federal unemployment compensation 

12 law.’’. 

13 (c) WITHDRAWAL STANDARD IN SOCIAL SECURITY

14 ACT.—Section 303(a)(5) of the Social Security Act (42 

15 U.S.C. 503(a)(5)) is amended by striking ‘‘and for refunds 

16 of sums’’ and all that follows and inserting ‘‘except as other17 wise provided in this section, section 3304(a)(4) of the In18 ternal Revenue Code of 1986, or any other provisions of 

19 Federal unemployment compensation law; and’’. 

20 (d) IMMEDIATE DEPOSIT REQUIREMENTS IN THE IN21 TERNAL REVENUE CODE.—Section 3304(a)(3) of the Inter22 nal Revenue Code of 1986 is amended to read as follows: 

23 ‘‘(3) all money received in the unemployment 

24 fund shall immediately upon such receipt be paid 

25 over to the Secretary of the Treasury to the credit of 


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1 the Unemployment Trust Fund established by section 

2 904 of the Social Security Act (42 U.S.C. 1104), ex3 cept for— 

4 ‘‘(A) refunds of sums improperly paid into 

5 such fund; 

6 ‘‘(B) refunds paid in accordance with the 

7 provisions of section 3305(b); and 

8 ‘‘(C) amounts deposited in a State fund in 

9 accordance with subparagraph (H) or (I) of 

10 paragraph (4);’’. 

11 (e) IMMEDIATE DEPOSIT REQUIREMENT IN SOCIAL

12 SECURITY ACT REQUIREMENT.—Section 303(a)(4) of the 

13 Social Security Act (42 U.S.C. 503(a)(4)) is amended by 

14 striking the parenthetical and inserting ‘‘(except as other15 wise provided in this section, section 3304(a)(3) of the In16 ternal Revenue Code of 1986, or any other provisions of 

17 Federal unemployment compensation law)’’. 

18 (f) APPLICATION TO FEDERAL PAYMENTS.—When ad19 ministering any Federal program providing compensation 

20 (as defined in section 3306 of the Internal Revenue Code 

21 of 1986), the State shall use the authority provided under 

22 subparagraphs (H) and (I) of section 3304(a)(4) of such 

23 Code in the same manner as such authority is used with 

24 respect to improper payments made under the State unem25 ployment compensation law. With respect to improper FedVerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163

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1 eral payments recovered consistent with the authority under 

2 subparagraphs (H) and (I) of such section, the State shall 

3 immediately deposit the same percentage of the recovered 

4 payments into the same State fund as provided in the State 

5 law implementing that section. 

6 (g) EFFECTIVE DATE.—The amendments made by this 

7 section shall apply to overpayments or payments or con8 tributions (or payments in lieu of contributions) that are 

9 collected as a result of an investigation and assessment by 

10 the State agency after the end of the 2-year period begin11 ning on the date of the enactment of this Act, except that 

12 nothing in this section shall be interpreted to prevent a 

13 State from amending its law before the end of the 2-year 

14 period beginning on the date of the enactment of this Act. 

15 SEC. 4. PREVENTING UNEMPLOYMENT COMPENSATION 

16 FRAUD THROUGH DATA MATCHING. 

17 (a) IN GENERAL.—As a condition for the eligibility 

18 of a State to implement the exceptions to the withdrawal 

19 standard described in subparagraphs (H) and (I) of section 

20 3304(a)(4) of the Internal Revenue Code, the State shall cer21 tify each of the following: 

22 (1) INTEGRITY DATA HUB.—The State uses the 

23 system designated by the Secretary of Labor (or an24 other system at the discretion of the State) for crossVerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163

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1 matching claimants of unemployment compensation 

2 to prevent and detect fraud and improper payments. 

3 (2) USE OF FRAUD PREVENTION AND DETECTION

4 SYSTEMS.—The State has established procedures to do 

5 the following: 

6 (A) NATIONAL DIRECTORY OF NEW

7 HIRES.—Use the National Directory of New 

8 Hires established under section 453(i) of the So9 cial Security Act— 

10 (i) to compare information in such Di11 rectory against information about individ12 uals claiming unemployment compensation 

13 to identify any such individuals who may 

14 have become employed; 

15 (ii) to take timely action to verify 

16 whether the individuals identified pursuant 

17 to clause (i) are employed; and 

18 (iii) upon verification pursuant to 

19 clause (ii), to take appropriate action to 

20 suspend or modify unemployment com21 pensation payments, and to initiate recov22 ery of any improper payments that have 

23 been made. 

24 (B) STATE INFORMATION DATA EXCHANGE

25 SYSTEM.—Use the State Information Data ExVerDate Sep 11 2014 22:37 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6203 E:\BILLS\H1163.RH H1163

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1 change System (or another system at the discre2 tion of the State) to facilitate employer responses 

3 to requests for information from State workforce 

4 agencies. 

5 (C) INCARCERATED INDIVIDUALS.—Seek in6 formation from the Commissioner of Social Secu7 rity under sections 202(x)(3)(B)(iv) and 

8 1611(e)(1)(I)(iii) of the Social Security Act, or 

9 from such other sources as the State agency de10 termines appropriate, to obtain the information 

11 necessary to carry out the provisions of a State 

12 law under which an individual who is confined 

13 in a jail, prison, or other penal institution or 

14 correctional facility is ineligible for unemploy15 ment compensation on account of such individ16 uals inability to satisfy the requirement under 

17 section 303(a)(12) of such Act. 

18 (D) DECEASED INDIVIDUALS.—Compare in19 formation of individuals claiming unemploy20 ment compensation against the information re21 garding deceased individuals furnished to or 

22 maintained by the Commissioner of Social Secu23 rity under section 205(r) of the Social Security 

24 Act. 


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1 (b) UNEMPLOYMENT COMPENSATION.—For the pur2 poses of this section, any reference to unemployment com3 pensation shall be considered to refer to compensation as 

4 defined in section 3306 of the Internal Revenue Code of 

5 1986. 

6 SEC. 5. EXTENSION OF EMERGENCY STATE STAFFING 

7 FLEXIBILITY. 

8 If a State modifies its unemployment compensation 

9 law and policies with respect to personnel standards on a 

10 merit basis on an emergency temporary basis as determined 

11 by the Secretary, including for detection, pursuit, and re12 covery of fraudulent overpayments under Federal pandemic 

13 unemployment compensation programs authorized under 

14 the CARES Act (15 U.S.C. 9021 et seq.), subject to the suc15 ceeding sentence, such modifications shall be disregarded for 

16 the purposes of applying section 303 of the Social Security 

17 Act (42 U.S.C. 503) and section 3304 of the Internal Rev18 enue Code of 1986 to such State law. Such modifications 

19 may continue through December 31, 2030. 

20 SEC. 6. FRAUD ENFORCEMENT HARMONIZATION. 

21 Notwithstanding any other provision of law, any 

22 criminal charge or civil enforcement action alleging that 

23 an individual engaged in fraud with respect to compensa24 tion (as defined in section 3306 of the Internal Revenue 


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1 Code of 1986) shall be filed not later than 10 years after 

2 the offense was committed. 

3 SEC. 7. BUDGET OFFSET. 

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

5 repealed. 


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Union Calendar No. 21 

118TH CONGRESS 

1ST SESSION H. R. 1163 

[Report No. 118–34] 

A BILL 

To provide incentives for States to recover frauducompensation, and for other purposes. lently paid Federal and State unemployment 

APRIL 6, 2023 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


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