Susan Silberstein of Dayton recently received a 1099-G tax form stating her husband, who has been retired since 2015, received $15,120 in unemployment benefits last year. She immediately reported it to the state, though that required multiple attempts because the website and phone numbers were jammed.
“I’m not happy about it especially since we have not heard anything back from Ohio,” she said.
She is hoping to get a corrected 1099-G in time to file her taxes in March.
Of the 159,696 people who have reported identity theft-related unemployment fraud to the state since mid-January, 64,500 say they received a fraudulent 1099-G, according to the Ohio Department of Job and Family Services.
Asked how long the process of getting corrected tax forms is taking, ODJFS spokesman Tom Betti said: “Given the process that is required to get to the end-step of issuing a corrected 1099, we are unable to provide a firm deadline.”
“After we receive a report of potential identity theft, we process the report, issue applicable fraud determinations and, if necessary, issue a corrected 1099 form to the IRS,” Betti said.
He said it’s a multi-step process including fact-finding, an investigation, and giving involved parties opportunities to respond and appeal.
Guidance from the IRS and Ohio Department of Taxation for people in this situation is to request the new form, but go ahead and file their taxes — correctly reporting their income without any benefits they didn’t receive — even if they haven’t received the corrected 1099-G.
Meanwhile business owners are inundated with fraudulent filings. Bill Castro, owner of El Meson, said they receive two or three forms a day about claims from people who never worked there.
“Boy, what a mess,” he said. “You have a stack of mail you open up, and you don’t know these people.”
He said they didn’t lay off a single employee, and now he is getting ODJFS forms claiming unemployment for more people than he ever employed.
They started flooding in this year, he said. And in addition to the staff cost of handling and contesting all these claims, he is concerned if some of them got approved they might impact how much he pays for unemployment insurance next year.
“That’s the scary part, because sometimes I think government and reality are misconnected,” he said. “It’s going to be interesting to see how much we’re going to get hit, and how much we’re going to have to spend to contest it.”
During the pandemic, the state of Ohio held harmless employers for layoffs and charged all claims to the mutualized account instead of employers’ individual accounts. That practice was ended in December, except in cases where the layoff is the result of a COVID-19 related quarantine or isolation order.
ODJFS officials say they are taking steps to prevent fraudulent claims from being paid out.
“We are well aware of the cost implications of fraudulent claims for Ohio employers and are committed to addressing the surge of criminal activity impacting our system,” Betti said. “We continue to analyze the impact on employers regarding identity theft. Thank you for your patience.”
Last year, the vast majority of the more than $330 million in Ohio unemployment fraud paid out was through the Pandemic Unemployment Assistance program. The PUA program is 100% federally funded so won’t impact employers’ insurance rates. This year saw a massive spike in traditional claims, though, and it’s unclear how many were approved.
Silberstein wonders how so much fraud was possible in the first place. After all, she noted, they had her address to send her the tax form. Why didn’t they send the other unemployment paperwork to the same address before paying out $15,000.
“For the price of a stamp they could have saved all of this money,” she said. “Immediately it would have been flagged.”
Asked about this, ODJFS officials said the Ohio Job Insurance system is programmed to allow claimants to choose electronic correspondence or regular mail.
“For those individuals that opted for electronic correspondence, the 1099-G form may have been the first indicator of identity theft because all 1099-G forms are issued by regular U.S. Mail,” Betti said.
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