1. Short title This Act may be cited as the Protecting Taxpayers and Victims of Unemployment Fraud Act . 2. Recovering Federal fraudulent COVID unemployment compensation payments (a) Allowing States to retain percentage of overpayments for program integrity (1) Pandemic unemployment assistance Section 2102(d) of the CARES Act ( 15 U.S.C. 9021(d) ) is amended by amending paragraph (4) to read as follows: (4) Fraud and overpayments Section 2107(e) shall apply with respect to pandemic unemployment assistance under this section by substituting pandemic unemployment assistance for pandemic emergency unemployment compensation each place it appears in such section 2107(e). . (2) Federal Pandemic Unemployment Compensation Section 2104(f)(3) of such Act ( 15 U.S.C. 9023(f)(3) ) is amended— (A) in subparagraph (A)— (i) by striking 3-year and inserting 10-year ; and (ii) by inserting , except that a State may retain a percentage of any amounts recovered as described in subparagraph (C) before the period at the end; and (B) by adding at the end the following: (C) Retention of percentage of recovered funds The State agency may retain 25 percent of any amount recovered from overpayments of Federal Pandemic Unemployment Compensation or Mixed Earner Unemployment Compensation that were determined to be made due to fraud. Amounts so retained by the State agency shall be used for any of following: (i) Modernizing unemployment compensation systems and information technology to improve identity verification and validation of applicants. (ii) Reimbursement of administrative costs incurred by the State to identify and pursue recovery of fraudulent overpayments. (iii) Hiring fraud investigators and prosecutors. (iv) Other program integrity activities as determined by the State. ; (3) Pandemic emergency unemployment compensation Section 2107(e)(3) of such Act ( 15 U.S.C. 9025(e)(3) ) is amended— (A) in subparagraph (A)— (i) by striking 3-year and inserting 10-year