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Unemployment problem, Client Received Benefits and now must Repay

I have just recently been hired by a new client. She was downsized in January 2009. She received severance pay until March 2009. In April 2009, she applied for and was granted Unemployment benefits. She received benefits because she had suffered a significant drop in her income; however, she was still working. She went from a management’s salary to a general employee’s wage.

Every week she went online and completed the information the IDWD needed to pay her benefits. She was working and in school while receiving her benefits. She has now completed her degree in nursing and is attempting to find a job as an RN.

June 2011, the client was contacted by an IDWD employee. This government official needed to meet with the taxpayer to go over some issues. The meeting occurred in July 2011. For the meeting the IDWD employee had prepared a spreadsheet. The spreadsheet represented wages that the client had claimed, and wages the employer had reported. The IDWD official claimed that the client’s reported wages do not match the employer’s wages, and the client was asked to make a statement. The IDWD official “coached” the client. The IDWD official told the client what to say in the written statement. The client was told to write a statement that supported the position that a calculation discrepancy existed. The taxpayer submitted information weekly, but the employer’s wages were reported every two weeks. The taxpayer’s statement affirmed what she thought the IDWD official had told her to say. November of 2011, the IDWD issued multiple rulings.

The IDWD issued a ruling for every quarter the client received benefits. At first the penalty started at 25%, then it increased to 50%, the penalties maxed out at 100% of benefits paid. The IDWD has ruled and found the client in violation of Indiana statute and has charged the client nearly $20,000 in penalties. She is also supposed to repay all the benefits that were paid to her. She now owes the Indiana Department of Workforce Development, nearly $39,000.

She cannot discharge this debt in bankruptcy. She is essentially an indentured servant to the State of Indiana. More as this case developes.

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