Justice Department Warns On Fake Unemployment Benefit Websites
The Department of Justice recently warned that fraudsters are creating websites mimicking unemployment benefit websites, including state workforce agency websites, for the purpose of unlawfully capturing consumers personal information.To lure consumers to these fake websites, fraudsters send spam text messages and emails purporting to be from an SWA and containing a link. The fake websites are designed to trick consumers into thinking they are applying for unemployment benefits and disclosing personally identifiable information and other sensitive data. That information can then be used by fraudsters to commit identity theft.
Help stop these scams by reporting them and using the list of state contacts at DOL.gov/fraud.
What Are The Penalties For Unemployment Insurance Fraud
All states are required to assess a penalty of not less than 15% of the amount of the fraudulent payment. Other penalties under state unemployment insurance laws generally include criminal prosecution with fines and/or incarceration required repayment of fraudulently collected benefits forfeiting future income tax refunds and/or permanent loss of eligibility for unemployment compensation. Commission of unemployment benefit fraud may also be prosecuted by the U.S. Department of Justice in federal courts under 18 U.S.C § 1341 or other appropriate federal statutes.
Victims Of Identity Theft
If you receive mail or a Form 1099G from the EDD, but you did not file a claim for benefits and you think someone else filed a claim under your name, address, or Social Security number, file a fraud report:
- Benefit Fraud Visit Ask EDD and select the Report Fraud category.
- Form 1099G Visit Ask EDD and select the Form 1099G category or call 1-866-401-2849, Monday through Friday, from 8 a.m. to 5 p.m., except on .
If we find you were a victim of fraud, we will remove the claim from your Social Security number and send you an updated 1099G, if needed. Review IRS tax guidance on benefit identity theft.
For more information about protecting yourself from identity theft, review the California Attorney Generals Identity Theft Information Sheets and .
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Office Of Special Investigations
Employment Security Department’s Office of Special Investigations is committed to preserving the integrity of the Unemployment Insurance program. Our office conducts many types of audits throughout the year on unemployment claims to ensure the accuracy of benefit payments made. Individuals found to have committed fraud are assessed penalties , are required to repay the amount identified as overpaid , and are subject to possible state or federal criminal prosecution.
We are very interested in the information you provide to us about fraud. However, we cannot provide information to you about the action we take on any allegation reported to our office unless you are an individual defined in RCW 50.13 and WAC 192-15.
State regulations prohibit the disclosure of information contained in the administration of the Unemployment Insurance Program. There will be no further communication from our office unless one of our investigators contacts you.
Identity Theft And Unemployment Benefits
States have experienced a surge in fraudulent unemployment claims filed by organized crime rings using stolen identities. Criminals are using these stolen identities to fraudulently collect benefits across multiple states.
Because unemployment benefits are taxable income, states issue Form 1099-G, Certain Government Payments, to recipients and to the IRS to report the amount of taxable compensation received and any withholding. Box 1 on the form shows “Unemployment Compensation.” You should report fraud to the issuing state agency and request a corrected Form 1099-G.
For details on how to report fraud to state workforce agencies, how to obtain a corrected Form 1099-G, a list of state contacts and other steps you should take if you are a victim, see the U.S. Department of Labors DOL.gov/fraud page. Please follow Department of Labor guidance on reporting fraud and protecting yourself from additional scams.
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Irs Information For Employers
Employers are often the first line of defense against unemployment fraud. Employers should:
- Respond quickly to state notices that its employees have filed for unemployment claims, especially if the names on the notices are not employees
- Be alert to misuse of the IRS-issued Employer Identification Number that fraudsters may use to file jobless claims
- File a Form 14039-B, Business Identity Theft Affidavit, if the companys EIN is being used to generate fraudulent unemployment benefit claims.
- Write to the IRS to close out the business tax account if the company is going out of business this will help curtail the misuse of dormant EINs.
You Didnt Have Fraudulent Intent
Before the prosecutor can prove that you are guilty of violating any California fraud law, he/she must first prove that you had fraudulent intent. If he/she cant prove that you acted with the specific intent to defraud, the judge will instruct the jury to find you not guilty of the charges.
As Santa Ana criminal defense attorney Zachary McCready11 explains, This means that if you
- believe you submitted a legitimate claim,
- accidentally provided the wrong information , or
- didnt realize that you needed to report freelance income to the EDD,
then you didnt intentionally act with fraudulent intent and you shouldnt be held liable for violating Californias unemployment benefits fraud.
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Reporting Fraud For A Monetary Reward
Prosecution For Ei Fraud
EI fraud is a serious offence that can result in prosecution. All parties involved can be prosecutedincluding EI claimants, employers, and third parties. Prosecutions take place under either the Employment Insurance Act or the Criminal Code of Canada, as determined by Employment and Social Development Canada.
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What To Expect After You Have Reported Fraud
We will help you through this difficult time.
You will receive:
You do not owe us any money as a result of the fraudulent claim You might have received a letter from us stating that you must repay benefits that we paid on the fraudulent claim in your name. You can ignore that letter! Our computer system automatically generates the letter when we deny an unemployment application. Were sorry for the anxiety it may have caused.
Be Sure To Report Your Correct Income On Your Taxes
When you file your taxes, dont wait for a new 1099-G or updated information file them using your correct income according to your records. Tips from the IRS fraud department and DOL on that are:
- The processing of your tax return should not be delayed while your report of unemployment identity theft is under investigation.
- If you have not filed your taxes yet, do not report the incorrect 1099-G income on your tax return.
- The American Rescue Plan of 2021 provides for a one-time exemption of $10,200 per person in unemployment benefits to individuals and couples who earned $150,000 or less last year. If you have already filed your taxes, do not file an amended return. The IRS will issue additional guidance.
- There is no requirement to file a Form 14039, Identity Theft Affidavit. A Form 14039 should be filed only if the taxpayers e-filed tax return is rejected because a duplicate return with their Social Security number is already on file or if the IRS instructs them to file a Form 14039.
- If you have already filed your taxes, do not file an amended return. The IRS will issue additional guidance regarding your next steps. Refer to the Identity Theft and Unemployment Benefits page on IRS.gov for updates and additional tax filing information.
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What Else Can I Do
Reporting Suspected Tax Fraud
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Restitution In Lieu Of Criminal Charges
Depending on the circumstances of your offense, a skilled California criminal defense attorney could arrange for you to pay restitution to the California EDD in exchange for the Departments agreeing not to file criminal charges.
If the Department agrees and you make timely payments you will not face criminal charges. However, if you default on any of your payments, the EDD may institute criminal proceedings at any time.20
You May Be A Victim Of Unemployment Identity Theft If You Received:
- Mail from a government agency about an unemployment claim or payment and you did not recently file for unemployment benefits. This includes unexpected payments or debit cards and could be from any state.
- An IRS Form 1099-G reflecting unemployment benefits you weren’t expecting. Box 1 on this form may show unemployment benefits you did not receive or an amount that exceeds your records for the unemployment benefits you did receive. The form itself may be from a state in which you did not file for benefits.
- While you are still employed, a notice from your employer indicating that your employer received a request for information about an unemployment claim in your name.
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Reporting Ui Fraud And Identity Theft
The best way to report unemployment fraud or possible imposter fraud against your employee is to raise an issue in your online account. Select the reason Suspected fraudulent activity as the reason for raising an issue. We will review the account filed in your employees name and take immediate steps to resolve the issue.
If you want to report possible fraudulent activity involving a person who is not your employee, you can report that to us using our online fraud form.
How To Report Fraud
The best way to report fraud to us is by visiting Ask EDD and selecting the Report Fraud category to complete our Fraud Reporting Form. You can also call the EDD Fraud Hotline at 1-800-229-6297 or fax 1-866-340-5484.
When reporting fraud:
- Provide all relevant information about the issue. Your report will be anonymous unless you include your name and phone number.
- Send any fraudulent documents or mail to EDD PO Box 826880, MIC 43, Sacramento, CA 94280-0225. You can also write Return to Sender on the envelope and provide it to your mail carrier.
- Write Return to sender on the envelope of any mail you receive that does not pertain to you and provide it to your mail carrier.
If you need to provide more information after reporting fraud, contact us again. Include the reference number provided when you first reported the issue.
Note: To ensure the confidentiality and integrity of any investigation, the EDD does not provide status updates unless court-ordered or required by law.
If you are a victim of identity theft, file a complaint with the Federal Trade Commission or call 1-877-ID-THEFT .
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Get A Copy Of Your Credit Report
The next step is to check your credit report to look for any suspicious or unauthorized activity. You should contact each of the three big credit reporting agencies . You can order a free copy online . You will need to verify your identity when calling, so have your name, social security number, date of birth, and other details ready. Ask to have a fraud alert added to your credit file.
If You Are A Victim Of Unemployment Identity Theft Here Are The Things You Should Do
Contact the unemployment agency in your state responsible for your unemployment claims and fill out their fraud or identify theft paperwork. Most states now have online options in addition to mail or fax. See the list below for each states Unemployment Fraud page and steps to prevent and report fraud.
If you receive confirmation that a payment has been made in your name, but you have not received it, you will need to report it to the IRS by completing Form 14039, instructions here.
States are attempting to contain the fraud and working with federal agencies, including the Secret Service and the FBI. As States and agencies work to uncover and prevent fraud, individuals are seeing a slowdown in claim approvals. At this time, the most proactive thing an individual making a first filing can do it to provide complete information to their respective state unemployment agency and respond promptly to any requests received from them. Nearly all states have a dedicated fraud reporting page and telephone number .
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Sign Up For The Irs Identity Protection Pin Program
Anyone who is a victim of identity theft should participate in the IRS PIN program to prevent anyone from filing tax returns on their behalf. Income tax fraud is another very serious issue right now. The PIN program assigns you a six-digit pin, and no one can file in your name without it. You can sign up for a tax fraud alert here Get an IP PIN.
How To Report Unemployment Benefits Fraud
The Department of Unemployment Assistance’s top priority is to protect unemployment claimants and make sure money disbursed through the system is going to valid unemployment claims.
Upon review of your Fraud Reporting Form submission, DUAs Program Integrity team will make note of the submission on the claim filed in your name and lock the claim, which will cease activity on that claim. In addition, this information will be provided to law enforcement as part of their investigation of the national unemployment fraud scheme.
The DUA Program Integrity team will process the reported fraud to ensure that if any payments were made, they are not recognized as income to you and are not reported to the IRS on Form 1099-G at the end of the calendar year for tax purposes. If you have already received a 1099-G related to this fraudulent claim, we will review your request and send you a corrected Form 1099-G. In addition, the fraudulent claim will not impact your ability to collect unemployment should you need to in the future and no charges will be assessed to your employer .
If you are an employer who wishes to report fraud, please email .
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