The Internal Revenue Service (IRS) has issued an identity theft warning to taxpayers who receive Form 1099-G for unemployment benefits they never filed for or received.
If you receive, or have received, an unexpected Form 1099-G it is a red flag that you may likely be a victim of identity theft.
According to the IRS, identity thieves took advantage of the pandemic by filing fraudulent claims for unemployment compensation using stolen personal information of individuals who never filed for unemployment benefits. Unemployment payments then went to the identity thieves and not the victims.
Reporting Suspected Identity Theft Related to Unemployment Benefits
If you are a Pennsylvania resident and receive Form 1099-G showing you received unemployment benefits you didn’t get, contact the Pennsylvania Office of Unemployment Compensation to report suspected fraud or visit the
Report Fraud Here page. You should also request a revised Form 1099-G showing you did not receive unemployment benefits. Residents outside Pennsylvania should contact their appropriate state agency for a corrected form.
Impact on Taxes
States issue Form 1099-G to the taxpayer and to the IRS to report what taxable income, such as refunds or unemployment benefits, were issued by state agencies. Under federal law, unemployment benefits are considered taxable income.
Pennsylvania is recommending anyone who has been a victim of identity theft related to unemployment payments
NOT to wait for a revised Pennsylvania UC-1099 Form to file his/her taxes. The IRS allows you to move forward with filing your taxes, reporting only your true income. You do not need to include the fraudulent income reported in your name.
There will be an investigation to verify the identity theft and upon verification a revised Form 1099-G will be issued to you showing you received no unemployment compensation. This can help you avoid being hit with an unexpected federal tax bill for unreported income.
What to do if Your E-Filed Return is Rejected Due To Identity Theft
If you’ve already e-filed your taxes, or if you do e-file, and your return is rejected because someone else filed using your social security number, then you will need to file a Form 14039, Identity Theft Affidavit, with the IRS.
NOTE: You do not need to file a Form 14039 due to an incorrect Form 1099-G due to identity theft.
For More Information
For more information regarding Identity Theft related to receiving a Form 1099-G we encourage you to visit:
IRS
https://www.irs.gov/newsroom/irs-offers-guidance-to-taxpayers-on-identity-theft-involving-unemployment-benefits
PA Office of Unemployment Compensation
https://www.uc.pa.gov/faq/claimant/Pages/Payment-UC-1099G-FAQS.aspx