Add unemployment fraud to the list of pandemic perils in 2020. As if this past year has not been stressful enough, it was just announced that at least at least $36 billion has been lost to improper unemployment payments being made. In many cases the improper payments are a result of fraudsters who spent the earliest months of the pandemic filing unemployment claims using stolen personal data.
Unemployment Fraud – What Happens Next?
Soon, millions of unsuspecting Americans are about to receive federal forms reporting unemployment benefits they never received. This leaves folks potentially vulnerable to identify theft issues. But also it also means that the IRS expects payment for income taxes for money they never received.
We’ve all been told to watch out for identity theft. However, this newest method feels particularly cruel in the face of all of the other struggles brought by the pandemic. The scammers took advantage of the CARES Act’s high unemployment payouts. (These included an extra $600 per week to offset the pandemic’s worst effects on the economy.) In an effort to get the relief out quickly, the Pandemic Unemployment Assistance program required little-to-no documentation. Which attracted quick attention from those eager to take advantage of others, unethically. For those whose identify was stolen, what this means is that they may receive a form known as the 1099-G. This form treats unemployment benefits as taxable income.
If you receive a 1099-G from unemployment fraud, here’s what to do next
If you are sent a 1099-G for unemployment benefits that you did not receive, there is a solution! (Spoiler – it requires some effort.) The IRS has indicated that it is aware of the identity theft and is working to help those affected. They’ve asked folks receiving incorrect 1099-G forms to contact their state’s unemployment agency. When working with the agency’s personnel, ask them to send a revised form reflecting the correct amount that you received.
While this may be difficult if you live in a state where the response rate has been slowed by the pandemic, have hope. Some states have established hotlines dedicated to addressing this specific issue. In addition, they have increased the number of support staff available to help.
If you can not get a revised form by the tax filing deadline, here is what to do. The IRS indicates that you should simply file your return that accurately reflects the amount that you received. Be sure to discuss with our office how we can best document your issue.
No other steps required
It’s completely natural to feel a bit panicked if you receive one of these forms. The unemployment fraud especially within Washington State, was rampant. Thankfully, the IRS has indicated that there is no need to file an Identity Theft Affidavit. The agency says that those affidavits are specifically for taxpayers whose e-filed tax return is rejected as a result of a duplication of the use of their Social Security number for a tax filing.
However, if you are concerned and want to take additional steps to protect your identity – ask for an Identity Protection PIN. This pin is used when you file your income taxes. Using a specific unique PIN will stop anybody else from being able to use your Social Security number to file a fraudulent tax return.
How you can protect yourself from the impact of identity theft.
Beyond that measure specific to the IRS, the Georgia Department of Labor has suggested the following steps you can take. These steps can help to protect against further impact of identity theft.
- Update your passwords on all personal accounts, including banking, shopping and email
- Notify the creditors and banks where you have accounts, that you may have been a victim of identity theft. They will place a special alert on your account.
- Contact your local police department to file a report. Be sure to keep a copy of that report to provide to credit agencies and others if needed.
- Start monitoring your credit report, keeping a sharp eye open for transactions you do not recognize. If you need to, dispute transactions with your credit cards. And request a freeze on your credit from the three credit reporting agencies until the situation is under control. (The the three credit reporting agencies are Equifax, TransUnion or Experian)
Did you get a 1099-G for unemployment benefits you did not receive? Contact our office for an appointment. We can help sort out the mess.
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