Tim’s Tax News on the Tenth – March 2021

IRS ANNOUNCES PEOPLE SHOULD BE ON THE LOOKOUT FOR IDENTITY THEFT INVOLVING UNEMPLOYMENT BENEFITS

The IRS recently urged taxpayers whose identities may have been used by thieves to steal unemployment benefits to file a tax return claiming only the income they actually received. In 2020, millions of taxpayers were affected by the COVID-19 pandemic through job loss or reduced work hours. Some taxpayers applied for and received unemployment compensation from their state. By law, unemployment benefits are taxable.

Scammers also took advantage of the pandemic by filing fraudulent claims for unemployment compensation using stolen personal information of individuals who had not filed claims. Payments made as a result of these fraudulent claims went to the identity thieves.

Taxpayers who receive an incorrect Form 1099-G should contact the issuing state agency to request a revised form. If they are unable to get a timely, corrected form from the state, the taxpayer should still file an accurate tax return, reporting only the income they received. They should save whatever documentation they have regarding their attempts to receive a corrected form from the state agency.

What action should people take if they think they might be an identity theft victim? People should visit the IRS Identity Theft Central (at www.irs.gov/identity-theft-central ) for more information about the signs of identity theft.

Taxpayers do not need to file a Form 14039, Identity Theft Affidavit, with the IRS about an incorrect Form 1099-G. An affidavit should only be filed when the taxpayer’s e-filed return is rejected because a return using the same Social Security number already has been filed.

If a taxpayer is 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 from the IRS.

An Identity Protection PIN is a six-digit number that is designed to prevent someone else from filing a tax return using a taxpayer’s Social Security number. The IP PIN is known only to the taxpayer and the IRS, and this step helps the IRS verify the taxpayer’s identity when they file their electronic or paper tax return.

If you would like more details, please do not hesitate to call our office. Our office has been successful in helping taxpayers with IRS and IDOR collection problems for over 29 years. If you have a tax or debt problem, please contact me at 847-705-9698 or thughes@lavellelaw.com and find out how we can help you.

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Lavelle Law, Ltd. is registered with the Illinois Department of Financial and Professional Regulation as an approved continuing education provider for CPE for CPAs and Enrolled Agents. If your organization is seeking CPE courses in the area of Business Law, Innocent Spouse Relief, IRS Collections, Tax Scams (including ID Theft) or other areas in tax law that can be taught at your office, please contact me at thughes@lavellelaw.com