Unemployment Fraud, Identity Theft, And Filing Your Taxes: An Expert's Advice
CHICAGO (CBS) -- It's going to be a rough tax season, according to experts preparing to deal with rampant unemployment fraud cases affecting your taxes.
It's an issue we're committing to tracking to bring you the information you need to protect yourself. On Thursday night, CBS 2's Tara Molina was Working for Chicago with new details on the subject.
A spokeswoman for the Illinois Department of Employment Security said the department has stopped 962,000 cases of unemployment fraud – some with regular claims, some with Pandemic Unemployment Assistance claims geared toward gig workers and the self-employed.
But we still don't know how many tax forms are about to go out to people who have no idea they're victims of one specific kind of fraud. Larry Wolfe's accounting firm is prepared, after already having dealt with unemployment fraud cases right in his office.
"We got it handled pretty quickly," Wolfe said.
But as to the cases of unemployment fraud in his office, Wolfe said he has never seen anything like it – even after 45 years in accounting with a specialty in tax controversy.
"This is something new with unemployment we've been encountering," Wolfe said.
He filed protests against the fraudulent claims, which were filed in the names of three employees, and was able to take care of them. But now they're gearing up to help their clients heading into tax season – proactively sending out a letter and a checklist with next steps.
"It's happened to a bunch of our clients," Wolfe said.
We've warned previously that if you get a 1099-G form from the IRS in the mail for taxes on unemployment benefits for which you never asked, you may well be a victim of fraud. So what should you do?
"First thing you should do if you get something fictitious is file a police report," Wolfe said.
You should also follow up with the IDES right away to report the fraud, and then take steps to protect yourself and your credit.
And when it comes to filing your taxes, Wolfe said, "Anyone who got this kind of fraud should file early and file by e-file."
There have also been concerns that they might have been victims of unemployment fraud and have a 1099-G issued to them, only never to get it because of an address change by the fraudster.
Wolfe explained the IRS will circle back when they find the discrepancy, but won't stop this year's return.
"The 1099-G won't hold up the refund for the current year. If you file the return without the 1099-G, it will take the IRS about a year, year and a half, to do the income match," he said. "Then they'll issue, if it's significant, a notice to the taxpayer called a CP2000, saying, 'Hey, you didn't pick this up', and that's when the taxpayer would normally become aware of that."
The IDES spokeswoman said once 1099-G forms are distributed, they'll provide some more information, and answers to our questions, on this issue.
Both IDES and the IRS have said taxes won't be paid on money you never received. Once fraud is reported and the claim is stopped, the victim is not liable.
The checklist that Wolfe's firm is providing is below.
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The IRS also has its own page with guidance for dealing with identity theft involving unemployment benefits.
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CBS 2 is committing to Working For Chicago, connecting you every day with the information you or a loved one might need about the jobs market, and helping you remove roadblocks to getting back to work.
We'll keep uncovering information every day to help this community get back to work, until the job crisis passes. CBS 2 has several helpful items right here on our website, including a look at specific companies that are hiring, and information from the state about the best way to get through to file for unemployment benefits in the meantime.
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