DMS and Department of Labor Partner with State Employment Agencies to Recover Unemployment Insurance Compensation Debts

David Burgess, Treasury Offset Program

The Treasury Offset Program (TOP) is a government-wide debt matching and payment offset system that works by matching a database of delinquent debts owed to various government agencies against payments made by the government. There are several programs within TOP that allow state government entities to submit their debt portfolios to TOP for offset against specific federal payment streams. These state partnership programs include the State Income Tax Offset Program and State Reciprocal Program, as well as programs for the collection of delinquent child support and food stamp debts.

The newest program is the Unemployment Insurance Compensation (UIC) debt program, which allows states to submit their UIC debt portfolio to TOP for debts due to fraud or a person's failure to report earnings for offset against federal tax refund payments. The program is being implemented with the assistance of the Department of Labor (DoL). DoL provides federal funds to state governments, that in turn administer the unemployment insurance system and collect the debts when overpayments of UIC are made. Regulations for submission of UIC debts to TOP were published on Jan. 28, 2011.

The first three states to submit UIC debts to TOP for offset were New York, Wisconsin, and Michigan. As of April 30, 2012, these three states alone have recovered $69.7 million through their use of TOP. Since January 2012, 11 additional states and the District of Columbia have begun submitting their UIC debts to TOP. These states are Alabama, Arizona, Connecticut, Georgia, Illinois, Maryland, Mississippi, Louisiana, Pennsylvania, South Dakota, and West Virginia. Since the inception of the program in 2011, TOP has collected more than $149.0 million in recovered UIC debts, as of April 30, 2012. For a breakdown of TOP UIC offsets by state, see the table below.

Participating states are pleased with the results of this program. On May 15, 2012, New York Governor Andrew Cuomo issued a press release announcing the success in New York of collecting $51.2 million in fraudulently collected UIC benefits to date.

Graphic: state UIC debt collection totals

"Once again, New York is at the forefront of efforts to protect taxpayer dollars through preventing and collecting fraudulently-obtained government payments. Every dollar we recover through this program becomes available to eligible unemployed New Yorkers who are most in need of this vital economic safety net," Governor Cuomo said. "We will continue to do everything we can to collect fraudulently-obtained benefits from people who don't deserve them, and who are in fact stealing from their fellow New Yorkers."

The biggest hurdle for state participation in the program has been upgrading their internal computer systems to communicate with TOP. Secretary of Labor Hilda Solis said, "It's a big cost. It is important because it's obviously taxpayer money and it's employer-based money that they pay into the system. We are responsible to help oversee and monitor and we work with the states who actually implement [TOP]." To this effect, DoL has committed funds to assist state agencies with the implementation of the program.

The Treasury Offset Program expects several additional states to begin referring their UIC debts to TOP by the end of the calendar year. This program serves as another example of the strong relationship TOP has built with state agencies and the continued success of centralized offset for both state and federal agencies.

To read New York Governor Andrew Cuomo's full May 15, 2012, release on the "Recovery of More Than $50 Million in Fraudulent Unemployment Insurance Payments," please visit

   Last Updated:  July 26, 2012