Identity Thieves Collect Unemployment — Victims Get Tax Bills

Start of tax season reveals fraud

These issues are emerging now as Americans begin receiving key documents to calculate their taxes. Once the coronavirus roared into the U.S. in 2020, millions of people lost their jobs (or saw their hours cut) and filed for unemployment compensation. That Congress approved pandemic relief that fattened the weekly benefits made the payments more lucrative for both bona fide recipients and crooks.

Scammers “took advantage of the pandemic by filing fraudulent claims … using stolen personal information of individuals who had not filed claims,” the IRS has acknowledged.

A USA Today investigation published at year's end showed that an estimated $36 billion in phony unemployment claims were paid to fraudsters in 2020, with sham applications in all 50 states.

The widespread fraud and abuse of the system has resulted in the AARP toll-free Fraud Watch Network Helpline's (877-908-3360) receiving more than 25 complaints a day from victims — like the Colorado woman — who received a Form 1099-G without taking a penny in unemployment.

The calls to the helpline come from across the country, says AARP's Amy Nofziger, who is the operation's director. Thieves, she notes, “don't care where you live.” As for the many victims, she says they “feel confused and nervous about who has been using their information. For most people this has come as a shock to them. Plus, all of us are a little anxious right now because of the pandemic."

More steps to protect yourself

The IRS also urges identity theft victims to:

• Visit Identity Theft Central for more on remedial steps.
• Request an Identity Protection PIN from the IRS if they are concerned about protecting their identity when filing a federal-tax return. The PIN is a six-digit number that prevents someone else from filing a tax return using the concerned person's Social Security number.

Nofziger also tells victims to:

• Obtain a copy of their credit reports at AnnualCreditReport.com from the three major bureaus — Equifax, Experian and TransUnion — to check for suspicious transactions.
• Put a security freeze on their credit reports at all three bureaus. This free step prevents new credit cards and loans from being approved in a consumer's name without consent. You can do this online or by phone: Equifax, 800-525-6285 or online; Experian, 888-397-3742 or online; and TransUnion: 800-680-7289 or online.

Another resource is available from the Federal Trade Commission (a consumer protection agency): the website IdentityTheft.gov, which is billed as the U.S. government's one-stop resource for identity theft victims.

For the Colorado woman, the arrival of the flawed Form 1099-G meant numerous calls, including to the state Department of Labor and Employment, the Social Security Administration, her retirement plan, the local district attorney and local police. Her advice? Keep a call log reflecting the time and date of your calls and take good notes, since you may need the information in the future.

She knows now that she's got plenty of company. In fact, when she spoke to the police, an officer shared that he, too, had been dinged by a bad 1099-G and was dealing with the same “rigmarole."

Katherine Skiba covers scams and fraud for AARP. Previously, she was a reporter with the Chicago Tribune, U.S. News & World Report and the Milwaukee Journal Sentinel. She was a recipient of Harvard University's Nieman Fellowship and is the author of the book Sister in the Band of Brothers: Embedded with the 101st Airborne in Iraq.