Tax season is in full force and has created an unexpected consequence – taxpayers finding out they were victims of unemployment fraud after federal and state spending on unemployment benefits during the pandemic reached an astounding $870 billion.
Unchecked fraud in pandemic unemployment programs turned thousands of Americans into unwitting identity theft victims.
- Throughout the pandemic, criminal organizations, including international cybercrime rings and opportunistic foreign actors used stolen identities to falsely claim unemployment benefits. The Secret Service, the Department of Justice, the Labor Department’s Inspector General, and the Government Accountability Office have all warned of ongoing fraud.
- As a result, millions of Americans are receiving tax forms from state unemployment agencies showing the total amount of unemployment benefits they (supposedly) received in 2021.
- Millions of Americans will be stuck dealing with the IRS and a hefty tax bill if they can’t prove fraud—at a time when the IRS is overwhelmed with a backlog of 16 million tax filings.
Nearly one out of every five dollars spent on unemployment insurance was an improper payment.
- The Biden Administration recently admitted that improper payments in the Federal-State unemployment insurance program totaled 18.71 percent from July 2020 to June 2021.
- This is higher than during a normal, non-pandemic 12-month period.
Democrats keep ignoring the unprecedented size and scope of fraudulently stolen funds.
- Early on in the pandemic, Republicans called to strengthen lax program rules that allowed criminals to target the program.
- Democrats have not held one single oversight hearing to investigate unemployment fraud or determine the extent of its impact on Americans despite repeated requests from Republican Ways and Means leaders. In the absence of Democrat action, Republicans held a meeting on the issue here.
WHAT TO DO IF YOU WERE A VICTIM OF UNEMPLOYMENT FRAUD
The IRS has told taxpayers to report the fraud to the state unemployment agency and the state will issue an amended tax form and update the record with the IRS. Use this Labor Department state directory to find the appropriate state contact. Below are links to additional resources provided by the Department of Labor.
- Report the theft online to the Federal Trade Commission: https://www.identitytheft.gov/#/
- Check credit reports for suspicious activity. A free credit report every week can be accessed through AnnualCreditReport.com or call 1-877-322-8228, according to the Labor Department.
- DOL also recommends reporting the incident to the U.S. Department of Justice’s National Center for Disaster Fraud, to help law enforcement stop future theft.
- Letter: Brady, Crapo, Walorski Brady, Crapo, Walorski Urge GAO to Investigate Fraudulent Activity in COVID Unemployment Insurance Programs
- REPORT: Fraud overwhelms pandemic-related unemployment programs