Tax refund erroneously intercepted by Arizona in unemployment fraud case

During the height of the pandemic, fraud ran rampant across many systems in the nation. Arizona paid out billions in fraudulent benefits.
Published: Jun. 24, 2022 at 4:37 PM MST
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LAVEEN, AZ (3TV/CBS 5) — Samuel Thompson was expecting a state tax refund of about $500 last year. Instead, he received a letter from the Arizona Department of Economic Security. “Last year, August 18, I received this letter from DES, the first one, stating that they have automatically withheld my state refund, offset for a situation that supposedly I did,” Thompson said.

Apparently, someone in New Jersey fraudulently claimed unemployment in Thompson’s name. The state wanted its money back. “I have never collected unemployment,” Thompson said. “[DES] asked if I live in New Jersey. I said I have never lived in New Jersey.”

At the height of the pandemic, fraud ran rampant through unemployment systems across the country. Arizona paid out billions in fraudulent benefits, and recovered about $1.4 billion, according to a report, a fraction of that coming from tax interceptions. Brett Bezio, a spokesperson for DES said in an email, “From January 2021 through April 2022, DES has recovered over $6.9 million in unemployment insurance benefit overpayments through state tax interception. Of that total, nearly $1.6 million was related to fraud.”

On Your Side asked how many tax interceptions are like Thompson’s and have been appealed. Bezio said the agency is not able to identify that number. “Five hundred dollars to somebody else may be nothing, but to my family, it means a lot,” Thompson said. “That’s why I’m pursuing it. It’s my hard-earned money that they have.”

On Your Side first asked DES about this situation at the beginning of the month. The agency promised to investigate, and just this week, the agency contacted Thompson to let him know a check would be in the mail within 10 days. “Our team continues to diligently review all instances of fraud and their potential impact on victims of identity theft. We appreciate the patience and partnership of the public as we work aggressively to recover benefits issued on fraudulent claims.”