IRS Issues Warning on Fraudulent Unemployment Forms

Learn How to Protect Your Business and Yourself from Unemployment Fraud

IRS Issues Warning on Fraudulent Unemployment Forms

Colorado Department of Labor has announced that fraudulent unemployment claims are raising across the state.

Suggested Steps to Take:

  1. Employers should complete and submit the Unemployment Claim Worksheet received by mail (indicate that this may be a fraudulent claim and give the reason for suspicion of fraud on the question that ask for "other information.")
  2. Notify employees who have been victimized and encourage them to protect their identity by registering at: https://cdle.colorado.gov/fraud-prevention

 

The latest financial scam involves fraudulent Form 1099-G, which government agencies use to report unemployment compensation. The IRS issued the following notice:

The IRS is urging 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.

States issue Forms 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.

During 2020, millions of taxpayers were impacted by the COVID-19 pandemic through job loss or reduced work hours. Some taxpayers who faced unemployment or reduced work hours applied for and received unemployment compensation from their state. Under federal law, unemployment benefits are taxable income.

However, scammers also took advantage of the pandemic by filing fraudulent claims for unemployment compensation using stolen personal information of individuals who had not filed claims. Payments made as a result of these fraudulent claims went to the identity thieves, and the individuals whose names and personal information were taken did not receive any of the payments.

Taxpayers who receive an incorrect Form 1099-G for unemployment benefits they did not receive should contact the issuing state agency to request a revised Form 1099-G showing they did not receive these benefits. Taxpayers who are unable to obtain a timely, corrected form from states should still file an accurate tax return, reporting only the income they received. A corrected Form 1099-G showing zero unemployment benefits in cases of identity theft will help taxpayers avoid being hit with an unexpected federal tax bill for unreported income.

Of course, you should also consult an appropriate professional to make sure you are not on the hook for taxes for income you never received.

Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

Copyright © 2018 IndustryNewsletters. All rights reserved.

Other Blog Articles

COVID-19 NEWSLETTER: Common Questions in Colorado

The most common questions we are receiving regard best practices for businesses in Colorado

COVID 19 News: Unemployment and SBA

Colorado Unemployment and COVID-19

Social Security: Note the Key Changes for 2020

Every year, the Social Security Administration takes a fresh look at its numbers and typically makes adjustments. Here are the basics for 2020 — what has changed, and what hasn't.

First, the basic percentages have not changed:

Best Practices for Terminating Employees

Sooner or later, every small business manager must face the task of terminating an employee. This is a task that can be unpleasant at a minimum and dangerously expensive if not handled carefully. You must remember that there are laws that provide employees with rights that you must not violate.

Traditional Leave Plans Versus Paid Time Off

Traditional leave plans separate time off into different categories, such as vacation, sick, and personal time. Employees are allotted a specific number of days or hours for each category. The time off, which is based on length of service, must be taken for the allotted purpose.

Pages

How can we help?

Let Autopaychecks provide you with a single solution to manage Payroll, Human Resources, Time Tracking and Employee Benefits.

Phone: 970-245-4244
Email: info@autopaychecks.com

Autopaychecks, Inc.

Providing payroll, human resources, time tracking and benefits solutions for small-to-mid-sized companies.

iSolved Solutions from Autopaychecks

Connect with Us