Unemployment -- Identity Theft

[BobKamman]

I came to the office today expecting to help out a client who had received a notice from the Texas Workforce Commission that his claim for unemployment benefits had been denied because he had not answered a request for additional information. He has never worked in Texas, or applied for unemployment there or anywhere else. They had his correct address, but did not show his employer or SSN.

But first, I had to deal with a notice from my own state unemployment office, about a claim that someone had filed that said his last day of work for me was March 29, 2020. I have never heard of this person, but now I know his SSN (it was issued in California – no comment).

What concerns me about my non-Texas client, though, is that it appears benefits were paid to someone from August 30, 2020 until they decided to question his eligibility on December 20. Will they issue a 1099-G and will he receive a CP-2000 in a couple years? I did some research and found this IRS notice dated December 29, 2020, which I doubt many people have seen yet:

https://www.irs.gov/forms-pubs/identity-theft-guidance-regarding-unemployment-compensation-reporting 

It ends with this hopeful message:

“If a payor or a law enforcement agency determines based on all facts and circumstances that, due to identity theft, payments made under an unemployment compensation program were not made to the individual under whose name the benefits were claimed, the payments should not be reported on Form 1099-G.

“If payments made due to identity theft are mistakenly reported on Form 1099-G in the name of an identity theft victim, a corrected Form 1099-G reporting $0 should be issued to the identity theft victim and filed with the IRS as soon as possible after the error is discovered.”

[itonewbie]

Yikes!

[sjrcpa]

I had this happen to one of my clients. Business got a notice from MD saying employee John Jones was granted benefits because employer never filed a response to the state's request for info.

2 Problems - employee and business are in NC. Employee was still employed by business. It took a couple of months to get it sorted. This happened in the summer (2019 I think), so 1099-G was not on the radar.

Good luck Bob.

[qbteachmt]

This happened in Washington back in May 2020:

"About 160 Pasco school employees and 125 from Kennewick reported that scam artists created the false accounts using their information. Richland school employees also were affected, but it’s unclear how many.

Read more here: https://www.tri-cityherald.com/news/local/crime/article242946591.html#storylink=cpy"

And: https://www.wrbl.com/news/national/huge-washington-unemployment-fraud-warning-to-other-states/

[sjrcpa]

Now I've had it happen to us. We got a notice from the state unemployment office that one of our employees (full-time, still employed) applied for unemployment in December. The slow mail service doesn't help. 

Also this week's headlines for my state:

Maryland Department of Labor Detected Over 156,000 Potentially Fraudulent Unemployment Claims Filed Since January
Of the 243,186 new claims filed in Maryland since January 1, 2021, 156,403 claims (64.31%) have been flagged as being potentially fraudulent due to new and existing aggressive security measures in place to protect taxpayers and the integrity of the state’s program. As fraudsters are becoming more brazen and adapting their tactics, Maryland continues to add new technology and safeguards to prevent and detect fraud. 

Over 87% of Claims Flagged and Investigated Confirmed as Fraudulent

[qbteachmt]

Oh, wow.