More than half of Massachusetts’ unemployment is caused by people who have not been able to collect their unemployment taxes, according to data released by the state’s Department of Revenue and posted to the department’s website Friday.
The state collects about $12 billion in unpaid taxes annually, according the Department of Finance.
That figure includes tax refunds and the amount of tax that people owe on wages, as well as unpaid income taxes, interest and penalties.
But a large chunk of the money that the state is missing is owed to people who are on unemployment insurance, or who were once on the job but have lost their jobs due to the economic downturn, said Julie Schatzberg, a spokesperson for the Department.
The state’s unemployment insurance program is set to expire at the end of the year, meaning millions of people who were previously working may have their benefits canceled.
Schatzberg said the Department is working to provide additional information to help individuals determine if they qualify for unemployment benefits, as the state does not collect unemployment tax payments on individuals who do not currently have jobs.
While it may seem counterintuitive, unemployment benefits may not be a permanent solution, said Schatzenberg.
The unemployment benefit does not allow people to work and get their wages paid until they are back on their feet.
But for people who don’t have a job, it can provide a sense of relief, especially if they can keep their benefits for up to a year, she said.
Schultzberg said that, for most people, the unemployment benefits that they receive are temporary and not permanent.
She said that people with unemployment benefits are not entitled to take the state unemployment insurance to the bank, which is required to take cash deposits for unemployment insurance.
Schulzberg said her department has received hundreds of complaints about the lack of payment for people on unemployment benefits since the state began releasing unemployment data in October.
The department is working with the state to determine if there is any way to make payments more permanent, she added.
The unemployment tax refund issue is not unique to Massachusetts.
In many states, employers who do file a tax return do not pay taxes on the wages and tips earned by employees, according a report from the National Employment Law Project.
The National Employment Partnership said that the unemployment tax refunds that workers are owed from their employers are not refundable and therefore are not counted toward a worker’s federal tax return.
The NELP’s report also said that workers in the U.S. economy can also lose up to $4,000 in unemployment benefits if they are not eligible for unemployment taxes.
The tax refunds are meant to offset the costs of unemployment insurance and other assistance programs, and workers should not be forced to take out unemployment insurance in order to collect unemployment taxes,” the report states.
However, the National Economic Council, an economic think tank that advocates for low-income workers, said in a statement that many states do not follow that guidance.
The Taxpayer Advocate’s Office, a nonpartisan advocacy group that represents tax payers, did not immediately respond to a request for comment.