Oops! Error Raises $4,800 in Benefits to $480,000

Say you received $4,800 last year in unemployment and disability benefits, but a gremlin in the computer at the state Employment Development Department reported the sum as $480,000?

And, further, say the erroneous amount was about to be reported to the Internal Revenue Service for income purposes?

Well, about 60,000 such notices went into the mail last week to Californians who received both unemployment benefits, which are taxable by the federal government, and disability payments, which are not taxable.

It seems that the computer slipped the decimal point two spaces so that, for example, total benefits of $4,800 would be reported as $480,000, department spokeswoman Suzanne Schroeder explained Friday.

She said the computer glitch was discovered and corrected shortly after the 60,000 notices went into the mail to recipients Jan. 15. Amended forms were quickly prepared and the last of them was mailed Friday, she said.

None of the erroneous forms were sent to the federal tax collectors, she said, noting that the IRS will receive only correct statements of non-wage income from the department.

“Some people called and were outraged,” she said. “But most were very good-natured and realized it was an obvious mistake.”

Schroeder said that altogether about 1.5 million notices of non-wage income were produced by the computer and that the erroneous statements involved only the small fraction of people who received both unemployment and disability payments.