Taxpayers can fall victim to unemployment fraud. The IRS wants to help
Samuel Corum / Bloomberg via Getty Images
Many Americans will get an unwanted surprise this tax season: the discovery that they have been the victim of jobless fraud.
Millions of workers received unemployment benefits during the Covid pandemic. You have to pay taxes on this aid.
However, according to state and federal officials, criminals have stolen identities en masse to obtain benefits on behalf of others. The victim, not the fraudster, is the one who receives the tax bill.
The IRS tries to avoid confusion and panic about fraud. A website for victims of identity theft-related unemployment was launched on Thursday.
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Individuals who received a 1099-G tax form but did not receive unemployment benefits may have become victims. (Some states may also have incorrectly issued the form.)
“This is a critical issue that at times plagues labor departments in the United States with local, state and even international criminals,” Georgia’s labor commissioner Mark Butler said in a statement on unemployment fraud.
In California alone, the state employment agency issues nearly 8 million 1099 Gs. According to the US Department of Labor, more than 18 million Americans were receiving unemployment benefits as of late January.
How you can protect yourself
Fraudulent taxpayers ultimately don’t have to pay the associated tax, and their tax refunds shouldn’t be delayed, the IRS said.
However, according to the federal agency, they should take certain measures:
- Contact the government agency that issued the form to report fraud.
- Ask the state agency to issue a corrected 1099-G. It will take time for the state to investigate the fraud and make corrections.
- Taxpayers should file an accurate tax return (one with no unemployment income) even if they do not receive a corrected 1099-G in time. (The corrected form contains $ 0 unemployment benefit.)
- Check free credit reports for signs of additional fraud. Consider placing a credit freeze or credit fraud alert with credit reporting agencies (such as Equifax, Experian, and TransUnion).
- Filed an identity theft complaint with the US Department of Justice’s National Center for Disaster Fraud. Fill out a complaint form online or call 866-720-5721.
- Consider opting for the IRS Identity Protection PIN program. This helps prevent fraudsters from filing federal tax returns on behalf of identity theft victims.