Bad actors are constantly on the prowl for personal identifying information (PII) that they can use for countless illegal activities, including opening credit cards, taking out loans, or filing for unemployment benefits.
While unemployment fraud often receives less attention, it creates challenges and potential financial repercussions for employers and employees alike.
It is important to be vigilant year-round for indications that you or an employee has been impacted by identity theft. However, January may present an additional opportunity for individuals to become aware of identity theft and a fraudulent unemployment claim filing in their name through receipt of Form 1099-G.
What is Form 1099-G?
An IRS Form 1099-G is issued when federal, state, and local governments pay someone any of the following:
- Unemployment compensation
- State or local income tax refunds, credits, or offsets
- Re-employment trade adjustment assistance payments
- Taxable grants
- Agricultural payments
Unemployment benefits and state and local income tax refunds are the most common reasons an individual would receive a 1099-G.
By law, these forms are required to be sent to applicable individuals by January 31 of the year following the year in which payment was received.
Who Will Receive a Form 1099-G?
Anyone who received unemployment benefits of $10 or more in a calendar year will receive a Form 1099-G in January of the following year.
Employees may also receive a Form 1099-G in instances where they did not receive unemployment benefits but the state is showing unemployment payments. While most state workforce agencies will suppress a Form 1099-G for an unemployment filing identified as a potential identity theft case, there are instances where an individual may still receive a 1099-G.
An individual may unexpectedly receive a Form 1099-G showing payment of unemployment benefits if a claim was fraudulently filed with their personal information and they had not previously received any indication of this fraudulent filing. Receiving a 1099-G may be the first indication that an unemployment claim was filed using their identity.
What Can I Do To Help? Employee Next Steps
- Report the fraud to the applicable state workforce agency.
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- State specific contact information can be found using your unemployment claims manager’s state fraud contact guide on our Online Support Center.
- Report the fraud through the Federal Trade Commission (FTC) website.
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- Visit IdentiyTheft.gov. The FTC provides a personalized recovery plan based on the information provided.
- With an account, the FTC can guide the employee through each step of the recovery process, update the plan as needed, and track their progress as well as provide pre-filled forms and letters that may be needed.
- Notify the IRS.
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- Review information available at Identity Theft Central.
- Respond to the IRS Form 1099-G or other IRS notices immediately by calling the number included on the form.
- If an e-filed return is rejected because of a duplicate filing under the individual’s Social Security Number (SSN), or if the IRS instructs the taxpayer to do so, complete IRS Form 14039, Identity Theft Affidavit.
- Contact banks, credit card companies, and credit reporting agencies to report identity theft fraud.
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- Place a freeze on relevant accounts and credit reports through Experian, TransUnion, and Equifax.
A Partner You Can Trust
It is important to have a partner who understands not only the importance of data security but also the importance of thorough and continuous monitoring of incoming claim and benefit charge activity. Your unemployment claims manager does just that.
Your unemployment claims manager’s security and privacy practices are designed to meet high industry standards. They combine over three decades of continuous service delivery and enterprise-level security features with comprehensive audits to help ensure client and business data remains protected.
Furthermore, your unemployment claims manager takes seriously its role in helping detect and prevent payout on fraudulent unemployment claims. They work with your organization to detect, report, and continuously monitor your accounts to ensure no charges associated with these fraudulent claims are levied against your account.
About Us
For more than 40 years, 501(c) Services has been a leader in offering solutions for unemployment costs, claims management, and HR support to nonprofit organizations. Two of our most popular programs are the 501(c) Agencies Trust and 501(c) HR Services. We understand the importance of compliance and accuracy and are committed to providing our clients with customized plans that fit their needs.
Contact us today to see if your organization could benefit from our services.
Are you already working with us and need assistance with an HR or unemployment issue? Contact us here.
The information contained in this article is not a substitute for legal advice or counsel and has been pulled from multiple sources. Some information was provided by our friend, Darby Gibson, Client Marketing & Insights Specialist, at Thomas & Company.
(Images by: The Yuriarcurs Collection and Freepik)
