January 26, 2021
Recently, Attorney General Dave Yost has asked Congress to protect hundreds of thousands of working Ohioans who may have had fraudulent unemployment claims filed in their names, shielding them from having to pay taxes on benefits that they never received.
The Ohio Department of Job and Family Services (ODJFS) is expected to send 1.7 million 1099-G forms this month to those whom ODJFS have a record of receiving unemployment benefits. However, it is anticipated that a significant amount of the 1099-Gs will likely go to Ohioans who did not file for or receive unemployment assistance.
“Construction workers, daycare providers, service industry workers – the backbone of this state – have worked hard throughout the pandemic and now the government is going to ask them to pay taxes on money they didn’t receive – it’s just not right,” Yost said.
Other states are reporting similar problems with fraudulent claims, which is why Yost is turning to Congress.
Yost believes there’s enough evidence of fraud to notify Ohio’s congressional delegation that it should suspend tax collection efforts and pause fees or interest from taxes owed on the claims until they are investigated.
He sent a letter to those members of Congress on Thursday asking for safe harbor provisions on behalf of Ohioans.
Yost is specifically asking Congress to consider:
• Exclude the amount from the income for the taxpayer in the given year until a final determination is made by the state unemployment compensation administrator that the amount is valid.
• Once an amount is determined to be valid, the IRS shall apply the amount to the tax year in which it was determined to be valid without any penalties or interest.
• If an amount certified to the IRS is determined to be invalid, the unemployment compensation administrator shall indicate to the IRS that the 1099-G was issued in error, and assist the taxpayer with any correction the taxpayer is required to make to modify their reported income to the IRS.
Any incidents of identity theft regarding unemployment benefits need to be reported to ODJFS. Ohioans can report those issues online at https://unemploymenthelp.ohio.gov/.
If you or an employee has been the victim of this type of fraud and you need assistance sorting out the ‘to-do’ list, please call the office. Unfortunately, I know first hand what steps must be taken.