From February 8, 2021 post.
Congressmen Brad Wenstrup (OH-02) and Steve Stivers (OH-15) led a group of 37 of their colleagues in asking the Biden administration to provide clarity, certainty, and relief to victims of Unemployment Insurance fraud during this tax filing season.
During the COVID-19 public health emergency, Congress enacted unprecedented relief measures to help Americans get by while businesses were shutting down. Among these measures were enhanced unemployment benefits for Americans who found themselves out of work.
With the new tax filing season set to begin on February 12, millions of Americans may soon be finding out that a fraudulent unemployment claim was made under their name. The Ohio Department of Jobs and Family Services (ODJFS) projects that tens of thousands of unemployment claims were filed fraudulently. In California, state officials have confirmed that approximately ten percent of unemployment benefits paid were fraudulent and are under investigation. Those benefits are estimated to be valued at more than $11 billion.
As unemployment benefits are taxable income, millions of Americans who have had unemployment benefits fraudulently claimed in their names will soon begin receiving their 1099-G tax forms provided by their states, as required by law. Currently, there are concerns as to whether states can investigate all claims of fraud and transmit the corrected Forms 1099-G to taxpayers before the April 15 tax filing deadline. In addition to the burdens on the state, finding out they may be victims of identity theft and fraud in the middle of an already complicated tax season will also place undue stress on people during a time when they can least afford it.
Reps. Wenstrup and Stivers’s letter requests:
1. Extend the deadline by which states are required to submit Forms 1099-G for those under review for fraudulent activity (alleviate a state burden);
2. Implement a “hold harmless” process for those taxpayers whose 1099-G’s are flagged as unreported income if those taxpayers believe they are victims of identity theft or fraud, such that no penalties or interest will accrue against them, to include issuing clear guidance to the taxpayer (alleviate a taxpayer burden);
3. Partner with those in the tax preparation community to help educate the public on the issue of identity theft involving unemployment benefits and to work with states to normalize procedures for identifying and verifying fraudulent cases (better message the issue to raise awareness); and
4. Track and report on the amount of fraudulent unemployment benefits that are removed from 1099-G forms due to fraud.
5. Finally, if there are regulatory or legislative barriers preventing them from doing so, we ask that they identify them so we can work on legislative solutions if needed.
“Congress acted swiftly and painted with a broad brush to address the COVID-19 public health crisis. Unfortunately, bad actors have taken advantage of the system and defrauded the federal government and millions of innocent Americans," said Congressman Wenstrup. "Investigating fraud claims takes time, and we must provide clarity, certainty, and relief to Americans who may be victims of unemployment fraud. We must also ensure state governments are able to work with the federal government to ensure Americans can file their taxes accurately and on time.”
“While the enhanced unemployment benefits authorized by Congress have been a lifeline for many Ohioans, they have also been an opportunity for cons who’ve taken advantage of this unprecedented situation to the tune of $330 million in our state alone,” said Congressman Stivers. “The last thing that families need as they are working to get back on their feet is to be hit with an astronomical tax bill that they did not incur, and state governments need time to fully investigate instances of fraud. The federal government has a responsibility to address the situation, and I stand ready to work with the Biden administration and my colleagues in Congress to do so.”
Original source can be found here.
