Labor Department creates site for unemployment fraud victims

Personal finance

LaylaBird

The U.S. Labor Department launched a website Monday to help Americans report identity fraud linked to unemployment benefits.

Unemployment fraud has surged during the Covid pandemic. Much of it is linked to organized crime rings that bought identity information stolen in past data breaches, according to the labor bureau.

Criminals use this data to apply for benefits in others’ names.

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Victims may have only discovered the theft during tax season as unemployment agencies issued 1099-G tax forms, which report annual unemployment income, to millions of people. Such people will have gotten a tax form with errors or for unemployment benefits they never collected.

Employed individuals have also received notices from their company asking about an unemployment claim filed in the worker’s name.

The new Labor Department website offers a directory with each state’s contact method for reporting this type of unemployment fraud.

The IRS also launched a separate website in February as a resource for victims of unemployment-related identity theft.

What to do

Scammed taxpayers ultimately don’t have to pay the associated tax. Victims must report the fraud to the state where the theft occurred. There are other measures they should take, too.

For example, states have to issue an amended 1099-G tax form to those who received one in error or with mistakes. But taxpayers shouldn’t wait to get the amended form to file their taxes, according to the Labor Department. They should file their taxes with the correct amount of unemployment income.

Those who already filed their taxes shouldn’t file an amended tax return. The IRS will issue additional guidance for such people, according to the Labor Department.

Victims should check their credit report for suspicious activity and report unemployment-related identity theft to the U.S. Department of Justice’s National Center for Disaster Fraud.

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