IOWA OVERPAYS UNEMPLOYMENT CLAIMS BY $900,000

By February 10, 2016 Blog

The State Auditor of Iowa, Mary Mosiman, released a report last week detailing that from January 1, 2012 to January 13, 2015 Iowa Workforce Development (IWD) forwarded improper UI disbursements and uncollected penalties for a total of $909,554.17.

The money the department uses to pay unemployed claimants comes from payments employers make to a state account to provide relief to people who lose their jobs from no fault of their own. Fraudulent claims such as those identified in the report result in higher unemployment costs for all Iowa businesses.

The misappropriation of benefits included $66,162.49 of overpayments identified based on a review of selected employer accounts, $97,119.29 resulting from the fictitious employer scheme, $723,245.89 issued during the first quarter of 2014, primarily resulting from a telephone system malfunction which occurred on March 8, 2014, and $23,026.50 of uncollected penalties assessed by IWD.

Supporting documentation to verify other potential errors is not available because IWD, the state agency overseeing the unemployment program, failed to report the mistakes to the auditor’s office as required immediately after they were discovered.

Nonprofits Have Other Options

The above applies to all Iowa employers except 501(c)(3) organizations. 501(c)(3)s do not have to pay state unemployment insurance taxes – high or low. Many nonprofits could save as much as 30 percent more on their unemployment cost by opting out of the unemployment insurance tax system – an advantage provided to them by the IRS. Doing so affords nonprofits unique avenues that allow them to strategically handle unemployment claims administration and unemployment insurance taxes in ways that for-profits can only dream about.

Contact us today for more information concerning your nonprofit unemployment insurance tax advantages.

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