WASHINGTON – Ways and Means Committee Member Rep. Brad Wenstrup (R-OH) led a letter with Rep. Steve Stivers (R-OH) to the Biden Administration asking them to take action to “protect taxpayers and reduce the burdens placed on the states who administer our unemployment programs” as Americans approach the tax filing season.

As part of the CARES Act, the federal government greatly enhanced unemployment benefits to help Americans who lost their jobs. Now, millions of taxpayers have begun receiving a Form 1099-G indicating the amount of unemployment benefits they received in 2020.

The problem: For many, this may be the first time they discover the state has issued unemployment benefits fraudulently claimed in their name.

• Generous unemployment benefits have been an easy target for criminals, including international criminal rings.
• The Labor Department’s Inspector General warned fraudulent benefits could be as much as $63 billion. California’s state workforce agency recently confirmed that approximately 10 percent of unemployment benefits paid were fraudulent and are under investigation, valued at more than $11 billion.
• To avoid having to pay taxes on the benefits, taxpayers that had their identities stolen will need to contact the state to report the fraud and correct the form. In cases where a fraudulent claim was filed using the wrong address, the IRS could potentially flag it as unreported income in their auditing process, after the unknowing taxpayer has already filed their taxes.

Republicans want to protect taxpayers and stop criminals from diverting billions away from unemployed Americans. As a first step, in December, Republicans were successful in adding program integrity measures that would offer protection against identity theft and fraud.

Republican lawmakers wrote to the Administration asking that extra steps be taken to ensure these taxpayers are held harmless while appeals are made to the state and IRS to correct their tax forms.

Reps. Wenstrup and Stivers asked the Administration to take four courses of action:

1. To extend the deadline for states to submit Forms 1099-G for those flagged by taxpayers and under review for fraudulent activity. This will help give states more time to investigate alleged fraud incidents and ensure that only accurate forms are being submitted to the IRS.
2. That the IRS implements a process for taxpayers who were victims of identity theft or fraud while receiving their unemployment benefits. No taxpayer should be punished by the IRS if they were victim of a scam or identity theft.
3. The IRS and Department of Labor should also work with the public and private sectors to educate taxpayers about potential issues of identity theft and fraud relating to their unemployment benefits while working with states to streamline the process of having a taxpayer receive help if they were a target of identity theft. For taxpayers who file their taxes online, they may not be aware of these potential problems.
4. The IRS and DOL also need to track and report to the public the amount of unemployment benefits that are removed due to fraud. This will help policymakers determine the full amount of fraud in the program and where CARES funds went to ensure it was only the taxpayers who needed these benefits the most received them.

Other Ways and Means Republicans who joined the letter include: Reps. Devin Nunes (R-CA), Adrian Smith (R-NE), Tom Reed (R-NY), Tom Rice (R-SC), David Schweikert (R-AZ), Jackie Walorski (R-IN), Darin LaHood (R-IL), Jodey Arrington (R-TX), Drew Ferguson (R-GA), Ron Estes (R-KS), Carol Miller (R-WV), Kevin Hern (R-OK), and Lloyd Smucker (R-PA).

CLICK HERE to read the full letter.