The General Assembly was out of session last week because of the Veto period that allows the Governor to decide what legislation, if any, to veto. Therefore my update this week will focus on a joint meeting of the House Budget Review Subcommittee on Economic Development, Tourism, & Environmental Protection which I chair, and the House Budget Review Subcommittee on General Government, Finance, Personnel & Public Retirement. The committee meeting was held to address fraudulent Unemployment Insurance (UI) claims.
There have been a large number of UI claims that have been filed by people who have been able to get the personal information of others. These fraudulent claims were made in the name of people who never filed a claim because they continued to work during the pandemic, and many of these false claims were paid. This has happened throughout the Commonwealth, including to members of the General Assembly. Committee members had a number of questions for the members of the Executive Branch who testified, but sadly, firm answers to most of the questions went unanswered.
One of the most pressing issues has been the lack of phone help. Callers most often get a voicemail recording and never receive a return call. Those lucky enough to actually have their call answered were frequently placed on hold until the call was canceled when the staff left work at the end of the day. The answer we were given to that problem was that a Call Center should be in place by about the middle of April. Hopefully the Call Center number will be well publicized.
There have been three (3) instances of data breaches in Kentucky’s UI system that the Executive Branch acknowledges, but I find it hard to believe that there were not more based on the volume of fraudulent UI claims the state has experienced. However, those who testified said the information was found on the “dark web”, not due to data breaches. We were also told that this problem is not unique to Kentucky. There have been over $63 Billion in fraudulent claims submitted nationwide and it is expected to hit $100 Billion. In Kentucky, there have been just under $6 Billion paid of which $1.6 Billion has come from the federal government.
In at least one case, the state paid a fraudulent claim and subsequently determined that the person whose identity was stolen was not eligible for UI. The state then placed a lien on that person’s residence. This is not simply unbelievable, it is unacceptable.
Because UI income is taxable, those who had fraudulent claims submitted and paid in their names have received forms from the State indicating they are “on the hook” for the tax bill. The question then becomes: “What is the government doing to resolve the matter and what should individuals do.” The response to the first part of the question was that the state was looking into the issue, but no specifics were offered. The response to the second part of the question was that the IRS said to only claim what was actually received, not what the state paperwork listed.
There are currently about 67,000 unresolved UI claims in the Commonwealth, and we were told that fraudulent claims are hindering payment of legitimate claims. Anyone having a tax return rejected because of fraud will have to file an amended return.
Regrettably the committee was unable to get firm information to several questions. Two (2) of these questions were: “What is now being done to protect citizens’ identity,” and “What is being done to pursue the criminals perpetrating fraud.”
Nevertheless, I will continue working with and pushing the Executive Branch on this massive problem and provide updates as appropriate. In the meantime, I urge everyone to remain diligent in working to protect their personal information.
As always, thank you for reading my updates and thank you for contacting me with your concerns and thoughtful suggestions. It is a privilege to represent you in the Kentucky House of Representatives and your input helps me make decisions that best represent the views of the Fourth District. I may be reached through the toll-free message line in Frankfort at 800- 372- 7181, directly at 502- 564- 8100, by visiting the Kentucky Legislature Home page at legislature.ky.gov and clicking on the Legislature button and then the contact a member link, or by mail to the Capitol Annex — Frankfort, KY 40601.