New law targets unemployment-insurance fraud - March 14, 2006

06-022

Media contact: Sheryl Hutchison, 360-902-9289

OLYMPIA – Governor Chris Gregoire today signed into law a measure that will close tax loopholes in the unemployment-insurance system and keep $1 billion a year in federal tax credits for Washington businesses. 

“When employers don’t pay their fair share of unemployment insurance, the burden is shifted to other employers,” said Governor Gregoire. “This law is a big step forward in our efforts to crack down on fraud and make the system equitable for all Washington employers.”

The new law targets employers who try to manipulate their unemployment tax rate by purchasing, restructuring or merging a business to get a lower rate. 

“This legislation also brings Washington state law in line with federal law which preserves $1 billion in tax credits for business,” said Employment Security Commissioner Karen Lee. “It also maintains more than $88 million in federal funding for the state to run the unemployment system.”

Senate Bill 6359 is part of a larger package requested by the Gregoire administration to combat fraud, Lee noted. 

The agency also received $1.8 million in the supplemental budget to increase efforts to detect and investigate fraud by employers and by unemployment claimants, and to collect unpaid taxes and invalid unemployment payments.  The funding comes from penalties and interest collected from violators over the past year.