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Frequently Asked Questions About Receiving Supplemental Payments for Lost Wages

Get started with our resources on Lost Wages Assistance:

You can also browse our collection below for answers to frequently asked questions about receiving supplemental payments for lost wages.

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States and territories with questions about the grant and how to administer the program can contact the FEMA Individuals and Households Help Desk.

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Answers to Frequently Asked Questions

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FEMA recognizes the burden and challenges states may face investigating and pursuing the recovery of fraudulent and improper lost wages assistance payments. Section 262 of the Continued Assistance for Unemployed Workers Act of 2020 provides that states, territories, and the District of Columbia may waive overpayments under the LWA program when the individual is not at fault for the payment, and repayment would be contrary to equity and good conscience. Such waivers only apply to LWA and apply to both the requirement for repayment by individuals (to the states, territories, and the District of Columbia) and the requirement for repayment by states, territories, and District of Columbia (to FEMA). FEMA does not have the authority to waive overpayments or to waive the requirement that states reimburse FEMA for the Federal share of awards not waived under the authority of Section 262.

Section 262 of the Continued Assistance for Unemployed Workers Act of 2020 provides that states, territories, and the District of Columbia may waive overpayments under the LWA program when the individual is not at fault for the payment, and repayment would be contrary to equity and good conscience. Such waivers only apply to LWA and apply to both the requirement for repayment by individuals (to the states, territories, and the District of Columbia) and the requirement for repayment by states, territories, and District of Columbia (to FEMA). States, territories, and the District of Columbia are responsible for recovering overpayments not waived under the authority of Section 262 and returning the funds to FEMA. (44 C.F.R. 206.120(f) (4 and 5)). Adjustments to expenditures will be made as funding is recovered (reimbursed to FEMA), and reported quarterly on the SF-425, Federal Financial Report. ((See 44 C.F.R. § 206.120.(f)(5)(i); see also Section III.E. of the State Administrative Plan template which provides additional guidance on the Recovery of Funds procedures and FEMA’s Lost Wages Assistance Grant Close Out guidance.) States, territories, and the District of Columbia have a responsibility to reimburse FEMA for improper payments regardless of when they are identified, even if the Period of Performance has expired or the grant has closed.

Only administrative expenses incurred during an open Period of Performance for overpayment recovery may be eligible for reimbursement.

Yes, the Period of Performance and the Closeout and Liquidation Periods which follow the Period of Performance may be extended upon request by the state, territory, or the District of Columbia with approval from FEMA. To request an extension, a written request must be submitted to FEMA with justification including any specific data supporting an extension and the timeframe for the extension request. Specific data for a Period of Performance extension request could include the number of claims left to pay, number of appeals being adjudicated, etc.  Specific data for a Closeout and Liquidation Periods extension request could include the number of overpayments that continue to be collected, the status of final reconciliation of costs, etc. Period of Performance and Closeout and Liquidation Periods extension request letters should be sent to FEMA-LWA-Reporting@fema.dhs.gov no later than 15 days prior to the end of the Period of Performance or Closeout and Liquidation Periods.

Information on reporting requirements for states, territories and the District of Columbia can be found on the Lost Wages Supplemental Payment Assistance Guidelines page. FEMA has provided a Lost Wages Weekly Report Template that can also be found on the same page under the Reporting Requirements section. States, territories and the District of Columbia must, on a weekly basis, provide a report to FEMA that includes the total, actual dollar amount of lost wages benefit payments made to eligible claimants, by program, the number of appeals for the underlying benefits received by claimants, and any pending claims. 

SF-425, Federal Financial Report to FEMA on a quarterly basis throughout the grant awards period of performance, including any partial quarters in which the period of performance is open. States/territories must submit the report even if no grant award activity occurs during a given quarter.

The following reporting periods and due dates apply for the SF-425 Federal Financial Report:

Reporting PeriodReport Due Date
October 1 – December 31January 30
January 1 – March 31April 30
April 1 – June 30July 30
July 1 – September 30October 30

Additional information on reporting requirements for states, territories and the District of Columbia can be found on the Lost Wages Supplemental Payment Assistance Guidelines page.

Offsets of supplemental lost wages payments other than for tax withholding are not permitted. States, territories and the District of Columbia may not offset supplemental lost wages payments for child support debts. See information on overpayment recovery above.

Unemployment benefits are taxable

Yes, supplemental lost wages payments are subject to federal income tax and the state, territory and the District of Columbia must communicate to individuals that such payments are taxable. Providing individuals with the option to have federal income tax withholding is a determination for the state/territory to make. The state, territory and the District of Columbia should encourage individuals to contact the IRS for specific guidance on the tax treatment of unemployment compensation (see https://www.irs.gov/taxtopics/tc418).

The state, territory and the District of Columbia is responsible for refunding to FEMA any unobligated balances that FEMA paid that are not authorized to be retained per 2 C.F.R. § 200.343(d).

Additionally, states, territories and the District of Columbia are responsible for recovering assistance awards from individual claimants who obtained the assistance fraudulently, assistance awards made to individuals who were not eligible for unemployment, and assistance awards made in error (See 44 C.F.R. 206.120(f) (4 and 5); see also 2 C.F.R. § 200.343(a)-(b) for guidance on the grant closeout and liquidation period).

Yes, states, territories and the District of Columbia may use the costs incurred to administer underlying state-funded benefit payments made to eligible claimants in order to demonstrate that the 25% cost share for their federal LWA award has been met.  If a state or territory chooses to do so, they must be able to allocate which costs were incurred to administer the underlying benefit payments to (1) only those claimants who were eligible for LWA, and (2) only during the six week period for which FEMA provided funds.

Yes, states, territories and the District of Columbia may use the underlying state-funded benefit payments made to eligible claimants to demonstrate that the 25% cost share for their federal LWA award has been met.  At closeout, FEMA will ensure the 25% cost share has been met at the aggregate level, for both benefit payments and administrative costs.  (See [44 C.F.R. § 206.110(i)]).

Last updated August 19, 2021