Victims of unemployment comp identity theft should seek corrected Form 1099-G

In a News Release, IRS has urged taxpayers who receive a Form 1099-G, Certain Government Payments, for unemployment benefits they did not actually get because of identity theft, to contact their appropriate state agency for a corrected form.

Background: Unemployment compensation is taxable income. (Code Sec. 85(a))

Form 1099-G is used by a state or local government to report to IRS that it made certain payments, including unemployment compensation payments.

IRS News Release: Noting that scammers have taken advantage of the COVID-19 pandemic by filing fraudulent claims for unemployment compensation using stolen personal information of individuals who had not filed claims, IRS has told taxpayers who receive an incorrect Form 1099-G for unemployment benefits they did not receive, to contact the issuing state agency to request a revised Form 1099-G showing they did not receive these benefits.

A corrected Form 1099-G showing zero unemployment benefits in cases of identity theft will help taxpayers avoid being hit with an unexpected federal tax bill for unreported income.

And, taxpayers who are unable to obtain a timely, corrected form from states should file a tax return reporting only the income they received.

Taxpayers do not need to file a Form 14039, Identity Theft Affidavit, with IRS regarding an incorrect Form 1099-G.

For IRS instructions to issuers of Form 1099-G with respect to unemployment compensation payments made to imposters, see Reporting unemployment compensation payments made to imposters.