Security News > 2021 > January > The Taxman Cometh for ID Theft Victims

The ID theft problem is coming to the fore once again: Countless Americans will soon be receiving notices from state regulators saying they owe thousands of dollars in taxes on benefits they never received last year.

Hackers, identity thieves and overseas criminal rings stole over $11 billion in unemployment benefits from California last year, or roughly 10 percent of all such claims the state paid out in 2020, the state's labor secretary told reporters this week.

States are required to send out 1099-G forms reporting taxable income by Jan. 31, and under federal law unemployment benefits are considered taxable income.

Many states have not reconciled their forms with confirmed incidences of fraudulent unemployment insurance claims, meaning many people are being told they owe a great deal more in taxes than they actually do.

In a notice posted Jan. 28, the U.S. Internal Revenue Service urged taxpayers who receive forms 1099-G for unemployment benefits they didn't actually get because of ID theft to contact their appropriate state agency and request a corrected form.

Fava said Michigan recently stood up a website where victims of unemployment insurance fraud who've received incorrect 1099-Gs can report it, but said he's not confident the state will issue corrected notices before the April 15 tax filing deadline.

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https://krebsonsecurity.com/2021/01/the-taxman-cometh-for-id-theft-victims/