As we were writing our April newsletter, we were informed by a client that he was potentially a victim of an unemployment scam. That makes two this tax season so far. Even if you already filed your return, this is important information. The IRS can take up to 12 months to match your return to 1099s.

States have experienced a surge in fraudulent unemployment claims filed by organized crime rings using stolen identities. Criminals are using these stolen identities to fraudulently collect benefits across multiple states.

You may be a victim of unemployment identity theft if you received:

1. Mail from a government agency about an unemployment claim or payment and you did not file for unemployment benefits.
2. Form 1099-G reflecting unemployment benefits you weren’t expecting. Box 1 on this form may show:
3. unemployment benefits you did not receive
4. an amount that exceeds the unemployment benefits you did receive
5. the form itself may be from a state in which you did not file for benefits

Here is some helpful advice:

1. If you get something from the New York State Department of Labor about a claim please do not throw it away – there are instructions on the bottom on some of the paperwork saying if it’s a fraudulent claim you can report it, and it shows you how right on the page
2. In NYS – you can check to see if you have a 1099G and get ahead of the potential fraud by following these instructions.
3. Do not report the incorrect 1099-G income on your tax return.
4. Consider opting into the IRS Identity Protection PIN program that helps prevent thieves from filing federal tax returns in your name – see details at Get an IP PIN.

Here is some addition reading on the subject:

1. How scammers siphoned $36B in fraudulent unemployment payments from US
2. Widespread Unemployment Fraud Strikes During the Pandemic: Steps for Individuals and Businesses
3. Beware of identity theft scam involving unemployment benefits