Taxpayers can be victims of unemployment fraud. The IRS wants to help

Many Americans will receive an unpleasant surprise this fiscal season: the finding that they were victims of unemployment fraud.

Millions of workers have received unemployment benefits during the Covid pandemic. They have to pay taxes for this help.

But criminals have stolen identities en masse to collect benefits on behalf of others, according to state and federal officials. The victim, not the artist, will be the one to receive the tax notice.

The IRS is trying to avoid the confusion and panic surrounding the fraud. It launched a website on Thursday for victims of unemployment-related identity theft.

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People who receive a 1099-G tax form but do not receive unemployment benefits may. (Some states may also have issued the form in error).

“This is a critical issue facing U.S. labor departments that sometimes involve local, state, and even international criminals,” Georgia Labor Commissioner Mark Butler said of unemployment fraud in a statement. .

In California alone, the state employment agency issues nearly 8 million 1099 Gs. And more than 18 million Americans were receiving unemployment benefits in late January, according to the U.S. Department of Labor.

Scammed taxpayers ultimately don’t have to pay the associated tax, and their tax returns shouldn’t be delayed as a result, the IRS said.

But there are some steps they should take, according to the federal agency:

• Contact the state agency that issued the form to report the fraud;
• Ask the state agency to issue a corrected 1099-G. The state will need time to investigate the fraud and issue any corrections;
• Taxpayers should file an accurate tax return (one without unemployment income) even if they do not receive the 1099-G corrected in time. (The corrected form will reflect $ 0 in unemployment compensation.)
• Check your free credit reports for signs of additional fraud. Consider placing a credit freeze or credit fraud alert on credit bureaus (such as Equifax, Experian, and TransUnion).
• File a complaint against identity theft at the U.S. Department of Justice’s National Center for Disaster Fraud. Fill out an online claim form or call 866-720-5721.
• Consider opting for the IRS Identity Protection PIN program. This helps prevent scammers from filing federal tax returns on behalf of victims of identity theft.