Class-action lawsuit claims State of Michigan improperly seizing tax refunds

ROYAL OAK, Mich. (WXYZ) - The State of Michigan's Unemployment Insurance Agency is improperly seizing the federal and state tax refunds of potentially thousands of men and women, according to a class-action lawsuit served on the state today.

The suit, filed by Royal Oak attorney Jennifer Lord, says that the refunds are being seized because of mistakes being made by automate machines.

"We’ve got a computer, a machine, acting as the judge and the jury and, ultimately, the executioner when it takes the person’s money without any chance of being heard," Lord said.

Innocent mistakes in the claims process can trigger state action, according to the complaint.  

"An example that I saw that I thought was really silly was the employee had checked a box that said he was laid off, and then the employer...had checked the box that said termination," according to Lord. 

That discrepancy alone was enough to seize a man’s tax refund. Lord says she’s aware of about 50 victims right now and expects to hear from many more. 

In a statement, a spokeswoman for the UIA said the agency had no comment on the lawsuit because it hasn't had an opportunity to review it. The statement also said, in part:

The UIA is charged with administering unemployment benefits to qualified applicants, while also protecting taxpayers against fraud and ensuring the integrity of Michigan’s Unemployment Trust Fund. The Agency is committed to continuous improvement in the effort to ensure the highest quality unemployment insurance services to our customers. The Agency developed its automated system in an effort to  modernize its operations, creating a fully integrated unemployment insurance system that shares data across functions in real time, eliminates manual, labor-intensive processes for staff, and provides ease of use for employers and claimants.

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