mcloudy.png
Wednesday December 8th, 2021 2:38PM

Tax forms help reveal extent of unemployment fraud in US

By The Associated Press
Related Articles
  Contact Editor

SACRAMENTO, Calif. (AP) — Unemployment agencies across the U.S. became lucrative targets for criminals when they were bombarded with claims last year as millions lost jobs due to coronavirus shutdowns.

Now, simple tax forms being sent to people who never collected unemployment benefits are revealing that their identity was likely stolen months ago and used to claim bogus benefits that have totaled billions of dollars nationwide.

Unemployment benefits are taxable, so government agencies send a 1099-G form to people who received them so they can report the income on their tax returns. States are mailing 1099-Gs in huge numbers this year after processing and paying a record number of claims.

In Ohio, Bernie Irwin was shocked two weeks ago when she opened the mail and found a 1099-G form saying her husband had claimed $17,292 in unemployment benefits last year. The only problem: Jim Irwin, 83, hadn't worked in 13 years.

Bernie Irwin, 86, said her daughter-in-law and a friend also received the tax forms. So did Republican Gov. Mike DeWine, his wife, Fran, and Republican Lt. Gov. Jon Husted, even though none of them had claimed unemployment benefits.

Nearly 26 million people requested unemployment aid in the initial months after states began ordering shutdowns. The unprecedented surge strained unemployment offices that are governed by federal rules but administered in patchwork fashion by state governments, with many relying on 1960s-era software to process applications and issue payments.

The federal government, as part of its $2 trillion relief package approved in March, significantly expanded jobless aid, making it a richer target for fraud. By November, the U.S. Department of Labor's Office of Inspector General estimated states had paid as much as $36 billion in improper benefits, with a significant portion of that blamed on fraud.

In California alone, officials say the fraud totaled at least $11 billion, with $810 million paid in the names of ineligible prisoners.

Now, overwhelmed unemployment agencies could face another onslaught — this time from people requesting corrected tax forms. A report from the California state auditor last week warned about the problem, and this week the state's Republican congressional delegation and state GOP Senate caucus both sent letters to Democratic Gov. Gavin Newsom's administration raising concerns about the impact on taxpayers.

“It does open a can of worms,” said Rob Seltzer, a certified public accountant in Los Angeles and a member of the California Society of CPAs. “It really depends upon how fast the (state) is able to send out a corrected form.”

Ohio has set up a telephone hotline and created a website allowing residents to report identity theft. Once the state confirms fraud has been committed, taxpayers will receive a corrected 1099-G form. In the past two weeks, 62,000 people had filed a report, according to spokesman Thomas Betti.

“It’s really easy for somebody to be like, ‘This isn’t my problem. They sent me the form, I’ve never been to Ohio.’ Still, you need to take care of this," Betti said. “Every unemployment system in the country is dealing with this massive amount of fraud.”

Last month, the IRS said it is likely that many victims won't be able to get a corrected tax form in time to file their federal taxes. In those instances, the IRS says taxpayers should ignore the 1099-G and file their taxes without reporting the fraudulent income.

Christina Elliott, owner of BEM Financial Services, worries that process could delay tax refunds for people who are counting on them to make it through the pandemic. She has two clients — one in California and one in Georgia — who say they received incorrect forms showing they received as much as $27,000 in unemployment benefits last year.

“They are literally going to have to investigate each one," Elliot said about the IRS. "These people already had their identity stolen that they didn't know about, here lies another problem where they will be waiting months just to get their (tax refunds) that are owed to them.”

The problem could be most acute in California, where officials mailed close to 8 million tax forms last month — more than five times the number they send in a normal year. The state Employment Development Department said it has updated its website and hired an additional 300 agents for its call center, training them on how to handle questions about the 1099-G forms.

Rooting out fraud and identity theft has been a struggle for the agency. A state audit released last week showed that from April to October, it responded to less than 2% of fraud reports. By November, it had a backlog of more than 77,000 such reports.

That likely included a report by Greg Musson, who owns a business near Fresno. State officials contacted his company in September to let him know one of his employees had filed for unemployment benefits in March. Musson was surprised to learn that person was him. He put a freeze on his credit and filed a fraud report with the state unemployment department but so far hasn't heard anything back.

“To know that somebody has my information and has been able to get really pretty personal with it, it’s like your home being broken into,” he said.

Carol Williams, chief deputy director of operations for the California Employment Development Department, said people who get incorrect tax forms should fill out a worksheet on the department website, adding that the website has been “busy.”

Some lawmakers worry the agency might not be able to handle the workload. Republican state Sen. Scott Wilk said one of his constituents was “dumbfounded” to get a notice that he owed taxes on $11,000 in unemployment benefits.

“In a time when we really need people to have confidence in their government, going through this pandemic and rolling out the vaccine, the last thing we need to do is additionally shatter their confidence in our ability to be competent,” Wilk said.

___

Associated Press reporters John Hanna in Topeka, Kansas; Andrew Welsh-Huggins in Columbus, Ohio; and Christopher Rugaber in Washington contributed reporting.

  • Associated Categories: U.S. News, Associated Press (AP), AP National News, Top U.S. News short headlines, AP Online Headlines - Washington, AP Online Congress News, AP Business, AP Business - Economy, AP Business - Personal Finance
© Copyright 2021 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Biden seeks to go big, fast and alone on COVID relief
President Joe Biden has laid out his for moving fast and without Republicans, if necessary, to pass $1.9 trillion in coronavirus relief, armed with new signs of economic strain brought on by the continuing pandemic
2:03PM ( 4 minutes ago )
Things to Know: Pentagon lends military aid to vaccine push
The Pentagon will deploy more than 1,100 troops to five vaccination centers in what will be the first wave of increased military support for the White House campaign to get more Americans vaccinated against COVID-19
1:50PM ( 17 minutes ago )
Oscar winner, ‘Sound of Music’ star Christopher Plummer dies
Christopher Plummer, the dashing award-winning actor who played Captain von Trapp in the film “The Sound of Music” and at 82 became the oldest Academy Award winner in history, has died
1:49PM ( 19 minutes ago )
Associated Press (AP)
Russia expels EU diplomats over Navalny as tensions rise
Russia’s Foreign Ministry says it is expelling diplomats from Sweden, Poland and Germany, accusing them of attending a rally in support of opposition leader Alexei Navalny, as international tensions grew over the jailing of the Kremlin’s most prominent foe
1:27PM ( 40 minutes ago )
Out of this world: Shepard put golf on moon 50 years ago
Fifty years later, Alan Shepard holds his place in golf history as the only person to hit a shot on the moon
1:22PM ( 46 minutes ago )
Moscow's jails overwhelmed with detained Navalny protesters
Detainees are recounting their miserable experiences as Moscow jails were overwhelmed following mass arrests from protests in support of opposition leader Alexei Navalny this week
1:19PM ( 48 minutes ago )
AP National News
Myanmar politicians defy coup, say they are true government
Hundreds of members of Myanmar’s deposed ruling party have declared themselves to be the sole legitimate representatives of the people and asked for international recognition as the country’s government
1:02PM ( 1 hour ago )
The Latest: WH: Pentagon OKs troops to assist with vaccines
The White House says the Pentagon will deploy troops to assist Americans getting vaccinated against COVID-19
12:33PM ( 1 hour ago )
Top diplomats of US, UK, France, Germany hold virtual talks
The top diplomats of Britain, France, Germany and the United States are meeting for the first time in almost three years as the European allies welcome America’s return to center stage in world affairs under President Joe Biden
12:21PM ( 1 hour ago )
AP Online Headlines - Washington
Senate approves budget bill as Harris casts tie-breaker vote
The Senate has approved a budget bill that's a key step toward fast-track passage of President Joe Biden’s $1.9 trillion coronavirus relief plan without support from Republicans
8:48AM ( 5 hours ago )
The Latest: Germany to receive 1st AstraZeneca vaccine
Germany’s health minister says first batches of the newly authorized AstraZeneca vaccine for will be delivered to the country’s 16 states Friday
5:01AM ( 9 hours ago )
The Latest: Hungary says Sputnik V ready for use next week
Hungary could be the first country in the European Union to administer a Russian COVID-19 vaccine as early as next week
4:55AM ( 9 hours ago )
AP Online Congress News
US employers add just 49K jobs, underscoring virus' damage
America’s employers barely added jobs last month, underscoring the viral pandemic’s ongoing grip on the economy and likely adding momentum to the Biden administration’s push for a bold rescue aid package
12:28PM ( 1 hour ago )
Germany's Merkel stands by backing for Russia gas pipeline
German Chancellor Angela Merkel has stood by her backing for a German-Russian gas pipeline project despite the Navalny case and the threat of U.S. sanctions
12:06PM ( 2 hours ago )
Jamaica faces marijuana shortage as farmers struggle
Jamaica is running low on ganja
12:04PM ( 2 hours ago )
AP Business
Military coup yet another blow for Myanmar's sagging economy
The military coup in Myanmar is unlikely to do the country’s struggling economy any good at all
4:28AM ( 9 hours ago )
US long-term mortgage rates flat; 30-year stays at 2.73%
U.S. long-term mortgage rates were flat this week, staying near record lows as the economy remains burdened by the coronavirus pandemic
9:25PM ( 16 hours ago )
GameStop booster did well; many devotees won't as shares sag
Followers of YouTube personality Roaring Kitty, inspired by his enthusiasm for buying stock in the underdog retailer GameStop, made him an icon in the social media frenzy that shocked Wall Street
7:32PM ( 18 hours ago )
AP Business - Personal Finance
Things to Know: Pentagon lends military aid to vaccine push
The Pentagon will deploy more than 1,100 troops to five vaccination centers in what will be the first wave of increased military support for the White House campaign to get more Americans vaccinated against COVID-19
1:50PM ( 17 minutes ago )
Oscar winner, ‘Sound of Music’ star Christopher Plummer dies
Christopher Plummer, the dashing award-winning actor who played Captain von Trapp in the film “The Sound of Music” and at 82 became the oldest Academy Award winner in history, has died
1:49PM ( 19 minutes ago )
A sexy Alexa, Dan Levy's M&M habit: Super Bowl ads to watch
It might not have seemed likely early in the pandemic, but the 55th Super Bowl Sunday is upon us
1:48PM ( 19 minutes ago )
Biden wants to go big, fast and alone on COVID relief
President Joe Biden has laid out his for moving fast and without Republicans, if necessary, to pass $1.9 trillion in coronavirus relief, armed with new signs of economic strain brought on by the continuing pandemic
1:42PM ( 26 minutes ago )
$3 million bond for Ohio officer who fatally shot Andre Hill
A magistrate judge has set bond at $3 million for a white former Ohio police officer charged with murder in the December shooting death of Andre Hill
1:37PM ( 30 minutes ago )