State Demands Man Repay $15,000 In Benefits He Never Received, Takes His Tax Refund

If the state accidentally pays you $15,000 in unemployment benefits, you’ll probably have to pay that money back. But what about when the state demands repayment of that money, even though you never received it in the first place?

That’s the living nightmare that a man in New Jersey has been experiencing for several months, as he tried to get anyone to look at the state’s own records to see he never got the nearly $15,000 it was demanding he repay… And then had his entire income tax refund taken to pay down the debt he didn’t owe.

The man tells the Newark Star-Ledger’s Bamboozled column (penned by Consumerist’s own Karin Price Mueller) that, during a very brief slowdown in construction work last year, he filed and collected a single unemployment payment of $642 for one week.

Then he went back to work and all was right with the world. Until a few months later when he attempted to file another one-week unemployment claim. But his claim was rejected. According to something in the state’s computers, he’d been collecting for all those months between the two claims.

Thing is, he hadn’t received an additional dime since that initial week, and he could prove it with the balance information on his benefits card.

And so he appealed, but as happens with most appeals to state bureaucracies, not only was it rejected, but the problem was made worse.

In December, the Appeal Tribunal (which couldn’t possibly sound more Orwellian) said that he had to repay all that money he’d never received because it was disqualifying the benefits “on the ground that the claimant was discharged for simple misconduct connected with the work.”

Except… he’d never been fired.

Oh, and once again. He’d only collected $642, not $15,000.

Without explanation, a subsequent letter said that some of the $15,000 had been repaid and he now only owed $6,864. Except he didn’t.

In spite of the fact that the state was demanding the repayment of those fictional disbursements, the 1099 form he received from the state for 2013 confirmed that he’d only received $642.

The final kick in the ribs came in February when he found out that his entire tax refund of $3,793 wouldn’t be going into his bank account because it had been applied to paying down the unemployment benefits debt… that he didn’t owe.

“It’s never-ending, and they tell me to keep doing something else or calling and appealing but they don’t answer, and then you stop trying,” the man recalls. “It’s insane that someone could screw this up so bad. This is my life that someone overlooked.”

When Bamboozled first looked at the man’s case, it seemed like maybe someone had illegally been filing unemployment claims under his name. But the answer was much simpler — pure idiocy.

Within a day of Bamboozled contacting the state, the Labor Dept. Commissioner was making a personal phone call to the man.

“He was very apologetic and he said my check from the tax refund is coming in the mail, and the other week of unemployment is going on my debit card,” says the man, who was probably happy just to talk to someone who didn’t yell at him. “He pretty much said it was a human error in the system. Someone screwed up and put it in the wrong way and it snowballed from there.”

A rep for the state confirmed to Bamboozled what appears to have happened: When the man applied for his second week of benefits in September, someone goofed and entered in the data as if he’d been unemployed since his first claim months earlier.

“The agent found that error but failed to properly correct it in the data system, so while one part of the error was fixed, not all aspects were caught,” he said. “The data still moved indicating this guy had been working all the time and he was paid the 15 grand that he never got.”

So one part of the state’s system said he owed the $15,000 while the part that kept track of the actual disbursals had the correct information.

“There’s no excuse,” says the rep. “This one was human error and it happens, but we really believe we should have caught it earlier — when he called us. We’re not happy it took him many weeks and a call to you, which is why the commissioner made a personal phone call.”

In the end, the man did get his tax refund and that second payment of $642 he should have received back in the fall. It’s just a shame he had to waste months appealing, making phone calls and then finally getting the media involved just to fix what was so obviously an error on the state’s part.

Bamboozled: NJ unemployment mix-up almost costs man $15,000, then state garnishes his tax refund [NJ.com]

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  1. oomingmak says:

    I had a similar thing happen about 8 years ago. The state of Illinois sent me notice that I owed around $5,000 in back state taxes. The problem was I lived in Massachusetts and had never lived in Illinois. This went around and around for about 12 months. Illinois was never able to provide any details about where the back taxes had come from — only that their system showed I owed them it and that was that. Eventually it got to the point where they offered me a deal to pay $2,500 or have the penalty increase to $10,000.

    I finally cleared it up by sending my full-time MA resident returns for the years in question three separate times. The first was never received the first, then second got signed for but then lost. Third time proved to be the charm when I finally was able to get the pity of somebody in the State tax office who had me mail it certified direct to their attention.

    • CzarChasm says:

      Everyone either has a personal story, or at least knows someone who has been screwed by the government.
      My friend went to sell a condo but there was a lien for unpaid taxes from the city from the developer. 6 months later she STILL cannot get someone from the city to tell her how much she owes.
      My father got a refund he wasn’t expecting from the IRS. Then he got a letter saying they actually overpaid him, and were applying interest to the money that they sent by accident. He hadn’t spent the money, but was not real happy about paying interest on their mistake. “Hi we are the government, here is a loan at a high interest rate that you didn’t ask for, and have no choice about taking.”
      I couldn’t get the state of RI to understand I had already paid my state taxes, even though the money was clearly taken out of my check, they couldn’t figure that part out. They had the amount I owed correct, they just missed the part about deducting it from my check for the last 9 months or so. I had to hire an accountant to write a letter explaining why they were idiots and actually owed me a refund.