Unemployment fraud is rampant. The states as well as the IRS are aware that there is a huge problem with unemployment fraud, but the government's response has been lacking.
Taxpayers who received an incorrect Form 1099-G for unemployment benefits they did not receive should contact the issuing state agency to request a revised Form 1099-G showing they did not receive these benefits. They must report unemployment identity theft to the state where it occurred. Taxpayers can use the official State Directory for Reporting Unemployment Identity Theft on the U.S. Department of Labor website to report UI fraud to the state.
Taxpayers who are unable to obtain a timely, corrected form from their state should still file an accurate tax return, reporting only the income they received. A corrected Form 1099-G showing zero unemployment benefits in cases of identity theft will help taxpayers avoid an unexpected federal tax bill for unreported income.
Taxpayers who are victims of identity theft should fill out an IRS ID Theft Affidavit, Form 14039.
Additionally, if taxpayers are concerned that their personal information has been stolen and they want to protect their identity when filing their federal tax return, they can request an Identity Protection Pin (IP PIN) from the IRS.