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By March 10, 2016Blog

Washington State is paying inmates unemployment benefits. The state is not just paying unemployed workers who may have had too good of a night out on the town and had to spend an evening behind bars. They are paying convicts who are serving real time.

The Union-Bulletin has the details.

Washington’s auditor’s office scrutinized eight county jails and identified 1,911 potential overpayments [to claimants in jail] worth about $656,000 from July 1, 2013 to Sept. 30, 2014. Of those 1,911, the Employment Security Department identified 1,264 payments that should have been at least partially denied, worth around $420,300, according to the department’s communications director Janelle Guthrie. The department has recollected roughly $100,000 so far, she said.

Those figures come from only only eight of 57 jails in the state! The real figure for the overpayments could be in the millions of dollars. To be clear, Washingtonians are not eligible to receive unemployment if they are serving time, because in that state one has to be “able and available” to work in order to receive benefits.

So why is the state paying unemployment benefits to persons who are not eligible to receive them?

Because the Washington Employment Security Department, the department that distributes unemployment money, is not allowed to access some of the confidential jail records necessary to find improper claims and payments. The problem is due to a bureaucratic hang-up that only the state legislature can fix.

The audit report recommends the state Legislature allow the Employment Security Department the access it needs to confidential jail information so they can identify improper payments and claims. In the meantime, the department is using a “temporary work-around” to help prevent further overpayment.

King5-TV has more details.

Nonprofits Have Other Options

The above bureaucratic mess is costly to all Washington employers. Fortunately, 501(c)(3) organizations don’t have to participate in the mess. 501(c)(3)s do not have to pay state unemployment insurance taxes. Many nonprofits could save as much as 30 percent 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. In the case of the above improper benefits payments, our in-house auditors catch thousands of dollars of claims errors made by states across the nation every year. When this occurs we work with our nonprofit client to inform the state and correct the overpayment.

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

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