Victims of unemployment fraud frustrated over potential taxation of benefits they did not receive
Following a year in which state unemployment agencies across the nation were victims of many fraudulent claims, the Nevada Department of Employment, Training and Rehabilitation (DETR) is advising people who received incorrect tax forms for unemployment benefits to immediately notify the agency upon receiving the documents.
One of those is Las Vegas resident Denise Tanata, 46, who first filed a fraud claim to DETR in August when her former employer notified her that they had received a notice from the department of an unemployment claim tied to Tanata’s name.
Despite never filing for unemployment insurance and never receiving benefits, Tanata received a 1099-G form from the state last week indicating that she had received about $800 in compensation.
The state issues 1099-G forms for anyone who received taxable income from a state agency, which includes unemployment benefits. People who were targets of unemployment fraud last year are beginning to receive 1099-G forms from the state, despite the fact that they did not receive any of the payments they are being taxed for.
DETR has disqualified hundreds of thousands of unemployment applications in the last year that were thought to be fraudulent, although the agency has not quantified exactly how many illegitimate claims were approved, or how much money the state has paid out on those phony claims.
Tanata filed another unemployment fraud claim with DETR after receiving a 1099-G form, and said she has not received any communication from the department regarding either of her claims.
“I never got ... a confirmation email, a letter, phone call, anything. And I also tried calling multiple times, and I can never get through,” said Tanata.
While the IRS and DETR have released statements on how to handle receiving an incorrect form, some are still unsure how to proceed.
“I'm just trying to figure out what I'm supposed to do. I mean, am I legally supposed to include that on my taxes? Or do I just not include it at all since I didn't actually receive it, but I know that form went to the IRS? Am I going to get audited because of it?” Tanata said. “So those are just things that I'm trying to figure out because I'm trying to do what's right.”
The IRS has advised people to request a revised form 1099-G from their state and to report on their taxes only the income they actually received. DETR has similarly advised individuals who believe they have received an incorrect 1099-G to file a report online with the agency through its unemployment fraud page and to accurately report their income on their taxes.
“We know Nevadans are concerned and have questions regarding these 1099’s. The IRS is aware of the magnitude of this issue,” Lynda Parven, administrator of DETR’s Employment Security Division, said in a press release on Monday. “Our recommendation is for claimants to file their tax returns with their correct information. And we suggest all claims filers keep records of the payments they received, if any. We ask for the public’s patience and cooperation as it will take time for our team to fix and reissue corrected forms to all impacted claimants.”