QBS and our partners sent out the following notice yesterday to our clients, providing guidance to employers and employees when addressing fraudulent unemployment insurance claims.
Many victims of identify theft related to unemployment insurance claims do not know they have been targeted until they try to file a claim for unemployment insurance benefits themselves, receive a notification from the state unemployment insurance agency, or receive an IRS Form 1099-G showing the benefits collected from unemployment insurance.
With tax season right around the corner, employees will start receiving the various forms needed to file their income tax returns for 2020. Employees who filed for benefits in 2020 should expect to receive an IRS Form 1099-G as unemployment benefits are taxable in most states. However, in some cases, this could be the first indication that a fraudulent claim has been filed using stolen personal information. It is important that you and your employees know what do if this form is received and the employee did not file for benefits.
What should my employee do if they receive a Form 1099-G for fraudulent benefits?
If the employee receives a Form 1099-G despite never having made a claim for unemployment benefits, they should follow these steps:
1. Report the fraud to the state workforce agency and their organization’s HR department. A complete listing of the contact information by state can be found here.
2. File a report with both the Federal Trade Commission (FTC) and the IRS. Employees should report the identity theft to the FTC. The FTC site also provides the employee with a personalized recovery plan based on the information that they provide. With an account, the FTC can walk the employee through each step of the recovery process, update the plan as needed, and track their progress, as well as provide pre-filled forms and letters that may be needed. Employees should also report the identity theft to the IRS to help avoid paying taxes on the 1099-G income. This can be done via phone at 1-800-908-4490 or by filing an IRS Form 14039 – Identity Theft Affidavit.
3. Contact the employee’s bank, credit card companies, and all three credit reporting agencies (Experian, TransUnion, and Equifax) to place a freeze on their credit reports to further protect their identity during the investigation.
Remember, the IRS will never:
— Initiate contact with a taxpayer by email, test, or social media to request personal or financial information.
— Call with threats of lawsuits or arrest.
— Call, email, or text to request a taxpayer’s Identity Protection PIN.
QBS continually monitors new developments in unemployment fraud. If you have questions or are in need of help with these claims or other issues regarding unemployment insurance, contact our team of experts today.