1099-G FRAUD

I would think the TP would have to speak to the State UE people to get it resolved or at least a letter stating there were no benefits received.

Theoretically, the state should issue a corrected 1099-G (Good luck).  

I don't think there's anything you can do in ProSeries to identify the income and then back it out. I'd probably omit the income, put in a preparer note. Then have the documentation of fraud handy to answer the IRS letter when it comes...

Edit;  you may also consider attaching the 1099-G and documentation when e-filing

Even if you have a self-driving car, the software won't help you change a flat tire.  

Im not sure what the IRS stance on this is, Id be tempted to put it on the return (to avoid the CP2000 in a couple years) then back it out on the Other Income line.  then be prepared to send a letter to IRS if need be in the future.

You can report UI fraud here, will give yua  record of reporting the fraud.

https://www.identitytheft.gov/

Upper right corner has a UI fraud link

I agree 100% with Lisa. Pick up the income on the 1099-G and then simply back it out on the Other Income line. Done. There's no audit issue and no CP5000 issue because you can prove it's not income that you actually received.

IR-2021-24, January 28, 2021

WASHINGTON – The Internal Revenue Service today urged taxpayers who receive Forms 1099-G for unemployment benefits they did not actually get because of identity theft to contact their appropriate state agency for a corrected form.

https://www.irs.gov/newsroom/irs-offers-guidance-to-taxpayers-on-identity-theft-involving-unemployment-benefits 

Will the IRS hold up the taxpayer refund if a fraudulent 1099-G reporting doesn't match? The IRS said NOT to include the fraudulent 1099-G on the tax return, but to be prepared to provide documentation if (when) the letter comes. Do we follow the IRS guidelines and not include the fraudulent 1099-G on the taxpayer return? I spoke with an IRS rep last week on the Tax Practitioner Hotline who admitted they are 6-12 months behind on addressing taxpayer letters/issues. Does this mean the taxpayer refund gets held up for 6-12 months because of the mismtach? Or do we disregard the IRS guidelines, include the fraudulent 1099-G, and back it out so the the refund gets timely issued? How are you preparers handling this?