False UI claim

[Margaret CPA in OH]

Client just emailed that she and half the other physicians in that practice had false claims filed under their names.  I am sending her info to get an ID Pin.  She states that the ID theft group they work with says she should also file an affidavit with IRS.  I would say of course, to follow the recommendation.  Has this happened to any of your clients?  How did you/they respond?  I've had only one other client with ID theft which was from credit card at a store.

[Abby Normal]

Haven't seen any yet, but I imagine a lot of folks are going to get a surprise 1099-G for unemployment this year. These state agencies need to tighten up their scrutiny of whose bank account these funds are going into.

[Lion EA]

https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin

[Lee B]

As a practitioner I would go further and give my client a copy of the IRS Identity Theft Guidelines because what our clients need to do  more than just get a  pin:

https://www.irs.gov/pub/irs-pdf/p5027.pdf

I would also give them this link to the FTC's Identity Theft Resources:

https://www.consumer.ftc.gov/features/feature-0014-identity-theft

[JRS]

$10.4 billion in fraud in California.

[ILLMAS]

Pick one, it's on the news everyday in your city:  https://www.youtube.com/results?search_query=cbs+2+chicago+unemployment+fraud

[Margaret CPA in OH]

Guess I did the right thing.  I sent this link  https://www.irs.gov/individuals/how-irs-id-theft-victim-assistance-works and forwarded the IRS Tax Tip 2021-07 both of which describe how and why to get the IP PIN and the links.  I will look at the pub, too, and probably forward it.  I think, as a physician's practice and having an ID theft group working with them, she is in good hands already. 

It's always something, isn't it?

[Lee B]

"The IRS is advising taxpayers who received a suspicious incorrect Form 1099-G for unemployment benefits they didn’t receive to contact the state agency that issued it to ask for a revised Form 1099-G indicating they didn’t receive the benefits. Besides unemployment benefits, the Form 1099-G can also be for other government payments such as state and local tax refunds, agricultural payments, taxable grants and reemplyment trade adjustment assitance payments.

Many state unemployment agencies have been overwhelmed with unemployment claims over the past year and have been slow to respond. The IRS said taxpayers who can’t get a timely, corrected form from their 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,” said the IRS.

The IRS noted that it previously issued guidance that states had requested about identity theft and unemployment compensation reporting, specifying that no Forms 1099-G should be issued to those individuals whom the states have identified as ID theft victims. Nevertheless, incorrect forms have been going out anyway.

The IRS added that taxpayers don’t need to file a Form 14039, Identity Theft Affidavit, with the IRS about an incorrect Form 1099-G. The identity theft affidavit should only be filed if a taxpayer’s e-filed return has been rejected because a tax return using the same Social Security number has already been filed. If taxpayers are worried their personal information has been stolen and they want to protect their identity when filing their federal tax return, they can ask for an Identity Protection PIN from the IRS. The IP PIN is a six-digit number that stops an identity thief from filing a tax return using the taxpayer’s Social Security number. The IP PIN is known only to the taxpayer and the IRS, helping the IRS verify the taxpayer’s identity when filing their electronic or paper tax return."

[Max W]

On 2/1/2021 at 9:22 AM, JRS said:

$10.4 billion in fraud in California.

..... plus another $20 billion the auditors expect to uncover.

1700 claims went to one address.   

Now, we will probably be tod that taxes will have to be raised to pay for the fraud losses.

[Medlin Software, Dennis]

3 hours ago, Max W said:

taxes will have to be raised

And still, CA will stick to the minimum wage base allowed by the feds, and the feds will not raise the minimum wage base, so even without the fraud, the CA fund will be upside down again, until the PTB slip some funds out of the general budget to cover the shortfall, probably after a few years of credit reduction.

Example for one employee, no claims in ~30 years, for a recent year.  51% of the amount paid in is covering expenses caused by failed businesses, over payments, and by the fund not collecting enough from ongoing businesses.  This is before the effects of the pandemic, on the state funds, will have to be accounted for.

Several states considered changed for UI collection for 2021, with MN holding up their calculations until just a few days ago.  CA, and most other states, just plowed forward, and are falling behind.

As of a few days ago, 18 states are upside down in their UI fund (borrowing from the fed fund).  The amount is over 48 billion.  This amount is likely growing by the day.  Employers in those states should consider planning for the first level of credit reduction of (.3%).

[Catherine]

Many states have specific guidelines for those UI fraud issues - so be sure to look those up for your state, too.

[Lee B]

This is going to be a real mess!   The state of Ohio has identified 62,000 fraudulent unemployment claims for which erroneous 1099 Gs have been mailed.

The state of California back in November had 77,000 active investigations of fraudulent unemployment claims.

A lot of tax refunds are going to be held for months!