Identity Theft Unemployment Benefits

Fraudulent unemployment claims are all too common in the era of COVID-19. With the additional money involved with unemployment, it is becoming lucrative for scammers to file as many fraudulent claims as possible. Consequently, many people have fallen victim to fraudulent unemployment claim filings.

The IRS has released the below guidance for impacted victims who may receive tax forms relating to fraudulently filed claims:

The IRS has highlighted identity theft involving unemployment benefits and urged taxpayers who receive Forms 1099-G, Certain Government Payments, to contact their appropriate state agency for a corrected form. Taxpayers who faced unemployment or reduced work hours due to COVID-19 pandemic applied for and received unemployment compensation from their state which are taxable income. However, scammers also took advantage of the pandemic by filing fraudulent claims for unemployment compensation using stolen personal information of individuals who had not filed claims. Payments made as a result of these fraudulent claims went to the identity thieves, and the individuals whose names and personal information were taken did not receive any of the payments.

The IRS has previously issued guidance requested by states on identity theft guidance regarding unemployment compensation reporting. Further, taxpayers do not need to file a Form 14039, Identity Theft Affidavit, with the IRS regarding an incorrect Form 1099-G. The Service has requested taxpayers to see Identity Theft Central for more information about the signs of identity theft and general steps that should be taken. Additionally, if taxpayers are concerned that their personal information has been stolen and they want to protect their identity when filing their federal tax return, they can request an Identity Protection Pin from the IRS.

In addition, the IRS has reminded taxpayers that unemployment benefits are taxable, and they should watch their mail for a Form 1099-G. Lastly, starting in January 2021, unemployment benefit recipients would receive a Form 1099-G from the agency paying the benefits (IR-2021-24, 1/28/2021).