Preventing unemployment compensation fraud through data matching

(a) In general Section 3304 of the Internal Revenue Code of 1986 is amended— (1) by redesignating subsection (f) as subsection (g); and (2) by inserting after subsection (e) the following: (f) Preventing unemployment compensation fraud through data matching As a condition of eligibility of a State to implement the exceptions to the withdrawal standard described in subparagraphs (H) and (I) of subsection (a)(4), the State shall certify to the Secretary of Labor each of the following: (1) Integrity data hub The State uses the system designated by the Secretary of Labor (or another system at the discretion of the State) for cross-matching claimants of unemployment compensation to prevent and detect fraud and improper payments. (2) Use of fraud prevention and detection The State has established procedures to do the following: (A) National directory of new hires Use the National Directory of New Hires established under section 453(i) of the Social Security Act— (i) to compare information in such Directory against information about claimants of unemployment compensation to identify any such individuals who may have become employed; (ii) to take timely action to verify whether the individuals identified pursuant to subparagraph (A) are employed; and (iii) upon making a verification described in clause (ii), to take appropriate action to deny or reduce unemployment compensation payments, and to initiate recovery of any overpayments that have been made. (B) State information data exchange system Use the State Information Data Exchange System (or another system at the discretion of the State) to facilitate employer responses to request for information from the State workforce agencies. (C) Incarcerated individuals Request information from the Commissioner of Social Security under sections 202(x)(3)(B)(iv) and 1611(e)(1)(I)(iii) of the Social Security Act, or from such other sources as the State agency determines appropriate, to obtain the information necessary to carry out the provisions of a State law under which an individual who is confined in a jail, prison, or other penal institution or correctional facility is ineligible for unemployment compensation on account of such individuals inability to satisfy the requirement under section 303(a)(12) of such Act. (D) Deceased individuals Compare information of individuals claiming unemployment compensation against the information regarding deceased individuals furnished to or maintained by the Commissioner of Social Security under section 205(r) of the Social Security Act..