- Office of the State Auditor
Media Contact for Audit Shows Millions of Dollars in Unemployment Insurance Contributions Still Uncollected by the State
Alicia Curran, Deputy Auditor for Communications and External Affairs
Boston — State Auditor Suzanne M. Bump today released an audit of the Department of Unemployment Assistance (DUA) which shows that from July 1, 2013 through December 31, 2016, the agency did not effectively manage the collection of delinquent unemployment insurance (UI) contributions from some Massachusetts businesses, resulting in millions of dollars of unpaid contributions. Additionally, it notes DUA failed to intercept state payment to contractors and other employers who were delinquent in their contributions to the UI trust fund. The audit points to poor protocols guiding its collection process and a failure to effectively use collection procedures at its disposal as the key factors driving this issue.
“By not properly collecting employer contributions, DUA weakens the unemployment trust fund and creates an unequal playing field for businesses,” Bump said of the audit findings. “DUA must use the tools—both technological and legal—at its disposal to identify how much of these delinquent payments can still be collected and aggressively pursue it. We owe this to workers, and to the businesses that play by the rules and make their contributions.”
According to its records, DUA did not refer for collection to the Revenue Enforcement Department over $170 million of the $284 million in delinquent UI payments and interest owed to it as of the end of the audit period. To address these deficiencies, the audit recommends DUA establish formal procedures to guide its collection of delinquent contributions. Additionally, it calls on the agency to implement a process for removal of delinquent employer accounts that owe less than $10 in order to allow DUA to more effectively use its resources. Finally, the audit encourages DUA to make use of the Comptroller’s Payment Intercept Program to ensure employers with delinquent UI contributions cannot receive funds from the Commonwealth.
According to the audit, DUA did not have policies or procedures in place to routinely refer delinquent unemployment contributions payments and interest owed for collection to the Revenue Enforcement Department during the audit period. The agency has statutory and regulatory powers to collect delinquent contributions in a number of ways including:
- placing levies on bank accounts and state or local funds owed to the employer;
- placing liens on real estate;
- initiating civil complaints; and
- seeking prosecution for not paying UI contributions.
A recent audit of the Department of Conservation and Recreation from Bump’s office found that the agency also failed to adequately collect funds it was due.
DUA is part of the Executive Office of Labor and Workforce Development. It is responsible for administering the Unemployment Insurance (UI) Program in the Commonwealth. It provides financial assistance and transitional services to unemployed Massachusetts citizens who are able to work, available to work, and looking for employment, with the goal of helping them become re-employed. The Commonwealth provides up to 30 weeks of UI benefits during the period that an individual is unemployed. Most employers that do business in the Commonwealth must pay unemployment contributions quarterly to DUA. These contributions cover the costs of unemployment benefits for workers. DUA paid UI benefits totaling $2.1 billion in fiscal year 2014, $1.6 billion in fiscal year 2015, and $1.47 billion in fiscal year 2016. As of February 2017, DUA had 444 full-time employees.