Am I going to jail for mistating income for unemployment?!

October 14, 2009 9:30 PM

IL-UnemploymentFilter: Am I going to jail for misreporting earnings from an affiliate site of mine that sits there and makes money while I've been job hunting?!

I was laid off in June from a job in Chicago. Before that occurred I had developed an affiliate website that has been earning me about $300/mo consistently, and I have the funds deposited into a bank account with an EIN that is setup under a sole proprietorship.

Since I was laid off I also applied for unemployment benefits and had told them when I certified each period that I had performed no work for wages.

It has since come to my attention that this may be a bad way to do it, and possibly considered fraud since apparently any earnings under a sole proprietorship are considered as part of the "gross income", and thus I should have reported the commissions I earned each month.

So there's that piece...I also have an LLC setup as I've been trying to launch my own business. I have done a small bit of consulting work with the funds going into the LLC, and I've also just today redirected my affiliate site revenue into the LLC. My understanding is that as long as I don't draw a wage from the account into my personal account, its not considered personal income for unemployment purposes as it is a separate entity and thus I don't need to claim anything and can collect benefits--but I'm not sure of this.

My questions (sorry, there's a few) are as follows:

1. Once the taxes for this year get processed and IDES finds out I had earnings from my affiliate website, are they going to try to collect the overpayment?

2. Realistically, will I be going to jail for this? My gf and I are completely freaked out that I'm going to get put away for earning a little from an affiliate site because I didn't realize I should have reported it.

3. Am I correct that as long as funds are going into my LLC and I'm not drawing a wage from it, then I'm not considered to have earned anything for that period, and thus don't need to report anything for unemployment and can continue collecting as normal?

4. What should I do now? I'm terrified about calling IDES for clarification because I feel like they'll log my phone number, hunt me down and toss me in jail potentially. I considered contacting a lawyer but have no idea what type would specialize in this area and not sure if it makes sense to spend the money until IDES starts asking about things. I'm the type who tries to be honest above all else, but in this situation I'm terrified that if I just call IDES and explain the situation they're going to open an investigation and jail me.

5. Should I tell IDES I've gone back to work and stop claiming benefits for now? Or is it ok to continue collecting them now that I've moved all income to my LLC and am not drawing a wage?

posted by anonymous to Law & Government (6 answers total)

I really doubt they will throw you in jail. I don't work for them directly, but I am familiar with many of the Chicago area IDES sites. If you want to email me with the office you are visiting, I might be able direct you to someone friendly to try to talk to. Some people are more nice than others.

Based on what I've seen happen, and what I think I know, is that your monthly benefit is determined from your pay history. Lets say it's $600 a month. If you make any money, lets say it's $200 a month, I think you then get a check for $400 a month.

I also believe that your income doesn't count against your total available benefit- if you qualify for 21 weeks @ $600, but your side income knocks that down to $300, I believe you end up with 42 weeks.

I'm not a lawyer, but what I would do if I was in that situation would be to simply tell them the truth, and let the chips fall where they may. What will probably happen is that your check will be adjusted to make up the difference. This happens all the time, as the time periods are often confusing, and people end up going back to work and inadvertently ccollecting a check they weren't entitled to. Don't try to fix the mistake by adding to it with a lie- there's a big difference between a mistake and a falsehood, even if you do it to try to correct the mistake.

I doubt they will get your caller ID and track you down if you ask a question. What is much more likely is that they won't answer any questions without you identifying yourself. If they answer the phone at all- they are understaffed and quite busy at the local offices.
posted by gjc at 10:19 PM on October 14, 2009

Call from another number, a pay phone, an office phone, anyone's phone but your's if you're worried about them tracing you. But, they will be the best people to tell you what is and isn't ok.
posted by stackhaus23 at 12:29 AM on October 15, 2009

Is Jail on the list of threats? As an Australian I get Centrelink- which is kind of similar. I mean, the US might be way different, but I'm thinking jail isn't the first thing they'll think!

Call them up and see. Figure out the best time to phone- here, it's 3 o'clock because all the stay-at-home parents are out picking up kids/running errands. (2nd best is as soon as the phones are open in the AM.) Tell them you're super freaked out about jail time- I'm sure they'll be reassuring.

I imagine a series of conversations that would go something like this:

anon: oh hey, IDES, I'm wondering what the procedure is for a mistake in reported earnings. (or whatever they call it.)
IDES: *finance**finance*
anon: oh cool.

later, a letter from IDES to anon:

Oh hey anon, it has come to our attention that you received an incorrect check due to *finance* and we'd like you to pay back the cash we gave you that you weren't entitled to. thanks.
love, IDES.

I realise these things/govt. bodies are scary, but they are not sentient beings, they are not out to get you. It is just an unfeeling machine that runs on red tape and lots of paper.
posted by titanium_geek at 5:37 AM on October 15, 2009

You won't go to jail. Just call and say you think you made a mistake.
posted by Green Eyed Monster at 8:05 AM on October 15, 2009

You won't go to jail, but you could lose your unemployment benefits.
posted by ThePinkSuperhero at 8:28 AM on October 15, 2009

I know it's not the same thing, but in NC where I live, I know of people who go on food stamps even when they have an income or are over the limit for how much you're allowed to have in your bank account at the time of application.(Mostly, people that are out of work for a time, but then just don't report when they find work and still get stamps for another few months). I don't know anyone who has gone to jail or even gotten into trouble or audited.
posted by Rocket26 at 5:11 PM on October 15, 2009