Taxpayers can be victims of unemployment fraud. The IRS wants to help

Many Americans will receive an unwanted surprise this fiscal season: the realization that they have been victims of unemployment fraud.

Millions of workers have reaped unemployment benefits during the Covid pandemic. You have to pay taxes for that aid.

But criminals stole identities en masse to collect benefits on behalf of others, according to state and federal officials. The victim, not the scammer, will receive the tax notice.

The IRS is trying to prevent confusion and panic about fraud. He launched a website on Thursday for victims of identity theft related to unemployment.

More from personal finance:
State officials are asking Biden to forgive $ 50,000 for student debt
A new $ 1,400 incentive may appear
The price of gas is rising. Here’s how you can save

It is possible that people who receive a 1099-G tax form but have not received unemployment benefits. (Some states may have issued the form in error.)

“This is a critical issue affecting U.S. labor departments, sometimes involving local, state, and even international criminals,” Georgia Labor Commissioner Mark Butler said of unemployment fraud in a statement.

In California alone, the state employment agency issues nearly 8 million 1099-Gs. And more than 18 million Americans were receiving unemployment benefits at the end of January, according to the US Department of Labor.

Deceived taxpayers ultimately do not have to pay the associated tax, and their refunds should not be delayed as a result, the IRS said.

But there are certain steps you should take, according to the federal agency:

• Contact the state agency that issued the form to report the fraud;
• Ask the state agency to issue a corrected 1099-G. The state will need time to investigate fraud and issue corrections;
• Taxpayers should file a correct tax return (one without income from unemployment), even if they do not receive a corrected 1099-G in time. (The corrected form will reflect $ 0 in unemployment benefits.)
• Examine your free credit reports for signs of additional fraud. Consider placing a credit freeze or credit fraud alert at credit bureaus (such as Equifax, Experian, and TransUnion).
• File an identity theft complaint with the U.S. Department of Justice’s National Disaster Fraud Center. Fill out an online complaint form or call 866-720-5721.
• Consider the option in the IRS identity protection PIN program. This helps prevent scammers from filing federal tax returns on behalf of victims of identity theft.