Stopping fraud isn’t really that hard
As news of the unimaginable scale of California’s unemployment fraud continues to break, it’s necessary to understand why this state has been so particularly vulnerable to fraud, and what can be done, now, to prevent it from continuing.
On the low end, we may be looking at $11 billion in fraud (already identified), while on the high end, some estimate the fraud could amount to $31 billion. To put that in perspective, that is 10% of the entire budget for the state of California.
Beyond the budget-breaking loss to all California taxpayers, each individual whose identity was stolen will now be facing a tax bill, since unemployment benefits are fully taxable as ordinary income. This is not a victimless crime by any means, and now the onus is on each person whose identity was stolen, many of whom are not even aware that benefits were filed in their name, to prove they were not the recipient. If somebody is unaware and doesn’t disclose the income, they may face an audit.