My phone was ringing this week with inquiries from clients, friends and acquaintances who received a Form 1099 in the mail for an unemployment claim that they did not file, asking what should they do.
The statistics on the successful filing of fraudulent unemployment claims throughout the country in 2020 are staggering. The pandemic created higher unemployment than the country has seen in years, and fraudsters took advantage of federal and state legislation making the filing of an unemployment claim as easy as possible in order to get funds to those in need.
Unfortunately, no good deed goes unpunished, and states were hammered with fraudulent unemployment claims. The State of Washington alone estimates that it lost up to $600 million in fraudulent unemployment claims in 2020.
Some individuals received notice at the time of the filing of a fraudulent unemployment claim made in their name and were able to stop it. If you didn’t receive notice at the time of the filing, and the perpetrator was actually successful in using your personal information to obtain unemployment benefits in your name, you will find out when you get a Form 1099 in the mail for your taxes. What a nightmare.
- Contact the state agency that issued the 1099 and report the fraud. Usually there is a toll-free number or website at the bottom of the 1099 that you can contact.
- Keep records of all telephone calls, emails or any other conversations you have with the State agency when reporting the fraud so you can document your report of fraud in the event you need it later.
- If you are asked by the State agency to provide a copy of the 1099 to them to evidence the fraud, redact your Social Security number and write “fraudulent claim” on it when you send it back to them.
- Give all documentation that you have of the fraud and your report of the fraud to your tax preparer.
- For more information, here are two resources that may be helpful to you.