An unknown number of self-employed New Mexicans who received unemployment benefits under the Pandemic Unemployment Assistance program learned this week that they must pay at least some of the money back to the government.
Bill McCamley, secretary of the New Mexico Department of Workforce Solutions, chalks the mixup to a discrepancy between the tax documents initially accepted by the state when it rolled out the program and federal guidelines released later.
McCamley says the department isn't tracking how many people have been impacted by the rule change, or how much they owe in total. But he says his department is in no position to waive the repayments.
SFR has learned of at least 15 Santa Feans who were told they owe money.
New Mexico was one of the first states in the nation to offer unemployment benefits to self-employed individuals who are ineligible for traditional unemployment programs. McCamley tells SFR that his department issued its own directives for the program and began accepting applications in late April, a week before the US Department of Labor issued guidance to states about how to run the program.
Because the federal government had extended the deadline for filing taxes until July 15, state guidelines initially allowed self-employed people to submit either their 2018 or 2019 tax returns as proof of income, says McCamley. However, subsequent PUA rule changes issued by the federal government prohibited states from accepting 2018 returns and instead required state departments to recalculate benefits based exclusively on 2019 tax documents.
"There was such a demand and hunger to get help that we decided we're going to get money out as soon as we possibly can," McCamley tells SFR by phone. "We have done everything we can to make decisions in favor of the worker."
New Mexicans whose PUA benefits were based on their 2018 returns were given 21 days after initial submission to file their 2019 returns and resubmit their documents to the state, he explains. He says the department sent online notifications and text messages to everyone who was affected by the change, though people who spoke with SFR said they didn't get those notices.
"I went back and looked through every text message I have received since January, and I never got any texts from the department. I don't know anyone that has," says Lauren Slaff, a culinary tour guide who received unemployment benefits under the PUA program and was later asked to return $1,752. She knows other people who have been asked to return much more substantial sums.
If the state did not receive the new documents in time, McCamley says the department was required to reduce an individual's unemployment benefits to the minimum of $168 a week and collect repayment of benefits issued larger than that amount.
Essentially, McCamley attributes the problem to the conflict between the emergency rules issued by the IRS and the new rules issued by the US Department of Labor.
"Why the federal government is doing one thing in one department and one thing in another department, you'd have to call Trump and ask him," he says. "I understand the frustration and I'm sorry that this is so complicated and frustrating, but on this one we really have no flexibility. This is a decision from the US Department of Labor, this is all federal funds, and we have to follow it."
The letters from Workforce Solutions provided to SFR give little to no explanation about the change. The letter Slaff received says the department sent her a previous notice about the amount she owes, and gives her 30 days to repay the debt before she is put on an automatic payment plan.
"In addition to withholding some or all of your future benefit payments, DWS will instruct the Department of Taxation and Revenue to intercept your tax refund up to the amount owed," the letter continues. It does not explain why or how the department determined that she owes money. It also does not mention that she must resubmit her 2019 tax returns in order to fix the problem.
Slaff tells SFR she called Workforce Solutions 50 times before she got through to an employee. That person, she says, could not adequately explain why she owed the money.
"The confusion and panic this has caused is just unacceptable," says Slaff, noting that in the last week she has heard from numerous friends and acquaintances in the same situation who have all gotten different explanations when they call the state. "No one at the department has a straight answer about what's going on, and I haven't found any information about the situation on the website. Now I finally have learned enough to understand why this is happening, but I think the situation was very poorly handled."
Sallyjane Schmoll, a local jeweler who depends entirely on the money she makes selling to tourists on the Plaza during summer months, says the repayment demand was disruptive. In February, she took out loans as she does every year and traveled to the Tucson Gem Show to buy jewelry supplies intended to last her for the rest of the year. She says she still has not received word of when artisans will be allowed to return to the Plaza.
"Twice I've had the rug pulled out from under me," she says. "I'm afraid, what happens if in a couple of weeks from now, even if we do everything exactly the way they tell us to, is this going to happen again?"
Schmoll says her husband refiled his 2019 tax returns on Wednesday, and by late Wednesday night he received notification that his unemployment insurance had been reinstated. She says she is grateful for the state's initial and quick response in support of workers.
"Imagine, they had to set up a whole new system that was completely different, basically overnight, to cover self-employed people." Schmoll tells SFR. "I don't know why they sent out these letters, I don't know what is going on … But I think when you are facing an unprecedented situation problems are bound to come up, and I also know that there's some really dedicated people working for the state who are looking out for me."
