The Idaho Department of Labor will begin imposing interest on the $30 million in benefit overpayments owed by thousands of unemployment insurance claimants, but anyone who reimburses the department before Aug. 31 will avoid the initial interest charge, the department said in a news release Tuesday.
The department has been assessing interest charges on employers who fail to make their unemployment tax payments since 1947, and in 1997 it gained the authority to levy interest on overpayments that are subject to liens. But the departments 35-year-old computer system was not capable of managing the interest charges until recently, the news release said. The department has liens against the property of 8,200 claimants who owe a total of $30 million in overpayments. Another $7 million in overpayments has yet to be subjected to liens. The average overpayment under lien is more than $3,600. On May 30, the departments compliance bureau sent letters to all claimants with liens against them, advising them interest charges would start being imposed on outstanding balances as of Aug. 31. A second mail notification also will be sent. And every notice of a lien filed more rec ently has included a notice that interest would be levied
The interest rate to be charged is one and one-half times the legal rate for judgments, which is set annually based on a formula that relies on federal interest rates. The rate is imposed at the time the lien is filed and remains unchanged until the debt is paid. The rate on liens being filed now is 8 percent per year. That equals 68 cents a month on every $100 owed in overpayments. The rate will range from 6 percent to 16.5 percent on the existing liens. Some date back decades and will carry the rate in effect when they were filed. The department collects about $10 million a year in overpayments. Imposition of the interest charge is expected to generate about $500,000 a year and also is expected to motivate more claimants to repay the department more quickly. Funds collected are deposited into the states Unemployment Insurance Trust Fund, raising the funds balance and limiting the annual taxes businesses pay to support the unemployment insurance program.