Personal Finance

White House, Senate Democrats unveil bill to battle pandemic aid fraud

Published

10 months ago

April 10, 2024

Senate Democrats on Tuesday unveiled a sweeping, roughly $1.3 billion bill that would expand the federal government’s powers to find and prosecute pandemic fraud, as Washington scrambles to recover the federal aid stolen by scammers during the worst economic crisis in a generation.

The measure, which would deliver on an earlier budget request from President Biden, arrived as the Justice Department announced that its efforts to date had resulted in charges against more than 3,500 defendants and the seizure or forfeiture of more than $1.4 billion in illegally obtained coronavirus relief funds.

But the new spending package immediately faced the prospect of a tough slog on Capitol Hill: Even though lawmakers often complain about waste, fraud and abuse, they have failed for years to overhaul government benefits, upgrade computer systems or take other steps that would safeguard federal funds in a future emergency.

The newly proposed legislation would devote about $675 million toward guarding protecting programs from identity theft, aiming to ward off criminals who often use real Americans’ stolen information to collect government aid. With it, lawmakers would allocate roughly $550 million to the Justice Department and leading inspectors general to bolster their oversight of federal spending.

The bill is authored by Sen. Dick Durbin (D-Ill.), the majority whip; Sen. Gary Peters (D-Mich.), who leads the chamber’s Homeland Security and Governmental Affairs Committee; and Sen. Ron Wyden (D-Ore.), the chairman of the Finance Committee. The trio of lawmakers coupled their proposed new spending with additional powers for federal law enforcement officials, who would gain more time to investigate crimes targeting certain pandemic relief programs.

“Bad actors got their hands on money that was meant to help our communities get through what was an incredibly difficult time,” Peters told reporters, adding that the proposal would help the government “get back stolen funds.”

The legislation follows four years after the U.S. government first marshaled its historic response to the pandemic, adopting aid packages that would total more than $5 trillion in federal aid. The money ultimately rescued the economy, helping workers who were out of a job and preserving businesses from shuttering forever. But the funds also became a tempting target for criminals, who seized on Washington’s haste and generosity starting in the Trump administration and racked up billions of dollars in fraud.

At the height of the pandemic, scammers targeted the nation’s unemployment insurance program, stealing the identities of real people to obtain benefits they did not deserve, according to a year-long investigation by The Washington Post, the Covid Money Trail. Last year, federal officials estimated that fraudsters stole $135 billion from the program, amounting to $1 of every $7 spent on jobless benefits.

Others beginning in 2020 deceived the Small Business Administration using fake tax records, ineligible Social Security numbers and names of the dead, obtaining low-interest loans that were supposed to help companies maintain their payrolls during the economic crisis. Two relief funds — the Paycheck Protection Program, or PPP, and the Covid-19 Economic Injury Disaster Loan, or EIDL — together may have been responsible for more than $200 billion in fraud-related losses, the agency’s inspector general has found.

Gene Sperling, a senior adviser to the president, attributed the rampant theft of taxpayer dollars to a lack of investment in federal technology, an overwhelming demand for federal aid and “the removal of several basic anti-fraud safeguards” at the start of the pandemic. That, he said, “led the Biden administration to inherit historic levels of fraud.”

In response, Biden in 2022 announced a new chief prosecutor for pandemic fraud at the Justice Department. The following year, he asked Congress to approve a $1.6 billion package that would toughen federal enforcement against coronavirus-related crimes, while bolstering U.S. aid programs to prevent future identity theft.

Under Biden’s watch, the Justice Department has also ramped up its enforcement efforts: In August, for example, federal prosecutors announced that they had brought 718 charges and other sanctions during a three-month sweep, totaling about $836 million in alleged fraud. On Tuesday, Attorney General Merrick Garland highlighted some of those prosecutions, stressing that the government’s work is still “far from over.”

But the activity has stood in stark contrast with the delays on Capitol Hill, where lawmakers for years have failed to deliver on Biden’s requests, leaving federal watchdogs underfunded. Often, House Republicans have blasted the president for misspending coronavirus relief money, even though federal investigators have found the worst abuses occurred during the Trump administration. No GOP lawmakers signed onto the new bill unveiled Tuesday, though party lawmakers have backed some of the proposed changes to unemployment insurance and other federal benefit programs.

Personal Finance

Trump funding freeze is existential threat: Morehouse College president

Published

8 hours ago

January 30, 2025

Business Finance News

Morehouse College President David Thomas speaks during Morehouse College’s graduation ceremony, before US President Joe Biden delivers his commencement address, in Atlanta, Georgia on May 19, 2024.

Andrew Caballero-Reynolds | Afp | Getty Images

David Thomas, the president of Morehouse College, said his office fielded a surge of calls this week from worried students and their families concerned the Trump Administration’s “federal funding freeze” would directly impact college access.

The sudden scramble was “perhaps only rivaled by what happened in March of 2020 when we realized that the Covid pandemic was truly a threat,” Thomas told CNBC. He became president of Morehouse, one of the country’s top historically Black colleges and universities, or HBCUs, in 2018.

This freeze on federal aid “would create another existential threat as great as the pandemic,” he said.

Thomas’ comments come amid ongoing confusion about how a freeze on federal grants and loans could potentially impact students and schools.

A Jan. 27 memo issued by the Office of Management and Budget, which would affect billions of dollars in aid, said the pause on federal grants and loans “does not include assistance provided directly to individuals.”

Although the memo was later rescinded, the White House said a “federal funding freeze” remains in “full force and effect.” It is currently on hold amid legal challenges.

Thomas, who is also on the Board of Trustees at Yale University, said college leaders across the country have spent the better part of the week focused on “the consequences of this action.” Morehouse immediately initiated a hiring freeze in preparation for a potentially significant financial disruption.

“All of the institutions are still in limbo,” he said.

What college aid may be affected

At Morehouse College, about 40% of the student body relies on Federal Pell Grants, a type of federal aid available to low-income families.

Following the memo’s release, the Education Department announced that the freeze would not affect student loans or Pell Grants.

“The temporary pause does not impact Title I, IDEA, or other formula grants, nor does it apply to Federal Pell Grants and Direct Loans under Title IV [of the Higher Education Act],” Education Department spokesperson Madi Biedermann said in a statement.

In addition to the federal financial aid programs that fall under Title IV, Title I provides financial assistance to school districts with children from low-income families. The Individuals with Disabilities Education Act, or IDEA, provides funding for students with disabilities.

The funding pause “only applies to discretionary grants at the Department of Education,” Biedermann said. “These will be reviewed by Department leadership for alignment with Trump Administration priorities.”

President Trump moves to halt federal grants

But questions remain about other aid for college.

The freeze could affect federal work-study programs and the Federal Supplemental Educational Opportunity Grant, which are provided in bulk to colleges to provide to students, according to Kalman Chany, a financial aid consultant and author of The Princeton Review’s “Paying for College.”

The disruption to federally backed research funding also poses a threat to college programs and staff.

‘Lots of reasons to still be concerned’

“There are lots of reasons to still be concerned,” said Jonathan Fansmith, a senior vice president at the American Council on Education.

“The administration has made it clear the executive orders will have implications for a huge range of existing awards and grants,” he said. “Those have implications for campuses and there is no more clarity in that regard than there was before.”

At Morehouse, “a huge portion of our faculty is supported by grants,” Thomas said. “If we can’t run the college, colleges like ours will probably be forced to drastically shrink themselves or close.”

Morehouse, located in Atlanta and founded in 1867, has more than 2,200 students.

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Personal Finance

What federal employees need to consider when evaluating offer to resign

Published

11 hours ago

January 30, 2025

Business Finance News

A “Do not cross” sign is illuminated at a crosswalk outside of U.S. Capitol building in Washington, US, November 10, 2024.

Hannah Mckay | Reuters

The Trump administration emailed more than 2 million federal workers this week, giving them the option to resign now and get pay and benefits through Sept. 30.

Workers have until Feb. 6 to accept the “deferred resignation” offer.

The payouts come on the heels of President Donald Trump‘s executive order to end DEI programs. On Wednesday, he said federal workers need to return to the office five days a week “or be terminated.”

“We think a very substantial number of people will not show up to work, and therefore our government will get smaller and more efficient,” Trump said at the signing of an immigration detention law.

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Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.

Experts advise federal employees to take their time before accepting the offer. By accepting the resignation, tenured federal employees could lose certain rights they may have.

“If you resign, it’s deemed voluntary,” said Michael L. Vogelsang, Jr., a principal of The Employment Law Group, P.C. “If you are a permanent, tenured employee in the government and the administration wants you out, laws still exist that federal employees cannot just be fired on a whim.”

Meanwhile, some lawmakers question whether the president can make this offer without Congressional approval.

Sen. Tim Kaine, D-Virginia, said federal employees should not be “fooled” by Trump’s proposal.

“If you accept that offer and resign, he’ll stiff you,” Kaine said. “He doesn’t have any authority to do this.”

The Voluntary Separation Incentive Payment Authority gives federal agencies the authority to offer buyout incentives for some employees to resign or retire, but it is capped at $25,000.

Asked for more detail on the payouts, including what authority the president has to offer to pay through September 30, the White House referred back to its statement given on Tuesday.

“If they don’t want to work in the office and contribute to making America great again, then they are free to choose a different line of work and the Trump Administration will provide a very generous payout of eight months,” White House press secretary Karoline Leavitt said in a statement.

There is already uncertainty around current funding for the federal government. It’s operating under a short-term continuing resolution passed in December. Unless Congress acts, the federal government could shut down on March 14.

Unlike with corporate buyouts, federal employees who received this offer can’t appeal for a better deal, experts say.

“Usually with buyouts, I think of more severance, and usually it’s sort of some kind of negotiation. This isn’t really negotiation. It’s sort of a unilateral offer,” Vogelsang said.

Still, some of the factors to consider for weighing the government’s deferred resignation offer are similar to what one would weigh in a corporate buyout, experts say:

Consider how much your position is at risk

For federal employees who aren’t permanent, Vogelsang says they should consider how much their position is at risk and if their skills make it likely they’ll be able to find another job.

“I think there’s enough executive orders out there that people in DEI, probationary employees, IRS employees, environmental employees, can probably read between the lines that their positions may be at risk moving forward,” he said.

Research job alternatives

Career experts advise not waiting to begin the job search.

“Start thinking about your search now, because it’s going to be longer than you think, especially with people flooding the market,” said Caroline Ceniza-Levine, a career coach and founder of Dream Career Club.

Prepare for a job search by updating your LinkedIn profile, identifying your accomplishments and reflecting on professional achievements so you can explain them clearly and concisely. “You don’t get every job that you apply for, and that can be a very frustrating and emotionally draining process,” said Ron Seifert, senior client partner at the staffing firm Korn Ferry.

Consider the work culture if you stay

Think about the culture and career implications of rejecting the offer. A question to ask yourself is, “If I’m still here after this is done, what will this place feel like?” Seifert said. “Is this a place where I have opportunity?”

“I would caution people against making decisions when they’re in the panic zone,” said Connie Whittaker Dunlop, principal of Monarch Consulting Group. “There are a fair number of unknowns, but if you can kind of ground yourself in what you know, what you value, and then make that, make a decision from that space, I think, people will be better served.”

Personal Finance

These child tax credit mistakes can halt your refund, experts say

Published

12 hours ago

January 30, 2025

Business Finance News

Millions of families claim the child tax credit every year — and filing mistakes can delay the processing of your return and receipt of your refund, according to tax experts.

For 2024 returns, the child tax credit is worth up to $2,000 per kid under age 17, and decreases once adjusted gross income exceeds $200,000 for single taxpayers or $400,000 for married couples filing jointly.

The refundable portion, known as the additional child tax credit, or ACTC, is up to $1,700. Filers can claim the ACTC even without taxes owed, which often benefits lower earners.

However, a lower-income family who doesn’t know how to claim the credit “misses out on thousands of dollars,” National Taxpayer Advocate Erin Collins wrote in her annual report to Congress released in January.

More than 18 million filers claimed the additional child tax credit in 2022, according to the latest IRS estimates.

By law, the IRS can’t issue ACTC refunds before mid-February. But the Where’s My Refund portal should have status updates by Feb. 22 for most early filers, according to the IRS.

Here’s how to avoid common child tax credit mistakes that could further delay your refund.

Know if you have a ‘qualifying child’

One child tax credit mistake is not knowing eligibility.

The rules can be “very confusing,” according to Tom O’Saben, an enrolled agent and director of tax content and government relations at the National Association of Tax Professionals.

To claim the child tax credit or ACTC, you must have a “qualifying child,” according to the IRS. The qualifying child guidelines include:

Age: 17 years old at the end of the tax year
Relationship: Your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister or a descendant of these
Dependent status: Dependent on your tax return
Filing status: Child is not filing jointly
Residency: Lived with you for more than half the year
Support: Didn’t pay for more than half of their living expenses
Citizenship: U.S. citizen, U.S. national or a U.S. resident alien
Social Security number: Valid Social Security number by tax due date (including extensions)

You may avoid some eligibility errors by filing via tax software or using a preparer versus filing a paper return on your own, O’Saben said. Tax software typically includes credit eligibility, which can minimize errors.

Missing Social Security number

Typically, parents apply for a Social Security number in the hospital when completing their baby’s birth certificate. But it can take one to six weeks from application to receive that number, according to the agency, which can create time pressure for families with a new addition around tax season.

Filing a tax return and claiming the child tax credit before receiving the Social Security number is a mistake, O’Saben said.

“I have seen [the child tax credit] denied for people who have filed before they got the Social Security number for a dependent,” he said. “And there’s no going back.”

If you don’t have the number before the tax deadline, you should request an extension, which gives you six months more to file your return, O’Saben explained.

However, you still must pay taxes owed by the original deadline.