What to Do When You–or an Employee– Receive a Form 1099-G for Unemployment Benefits You Did Not Ask for and Did Not Receive

by Randi J. Lewis, Esq.

Compensation,  Hot Topics

Millions of fraudulent unemployment claims have been filed across the country. Some victims have received Form 1099-G, Certain Government Payments, from their state unemployment office. These victims are understandably apprehensive that the IRS will demand payment of taxes on benefits they never received.

Fortunately, the IRS is trying to put minds at ease. In IRS News Release IR-2021-24, they provide guidance on what to do if Form 1099-G is filed reporting benefits the taxpayer did not receive. You will find the IRS guidanceĀ here.

Here is a summary of that guidance:

Immediately request a corrected Form 1099-G from the issuing state agency. File your tax return based on the amount of UI income you actually received. If zero, report zero. Do not file the inaccurate Form 1099-G. The IRS indicates you should not have to pay taxes on benefits you did not receive. If you do not get a corrected Form 1099-G in time to file with your 2020 federal tax return, you will get a notice from the IRS later in the year. The IRS indicates that not reporting the incorrect Form 1099-G will not delay the processing of your return nor any refund due.

About the author
Randi J. Lewis, Esq.

Randi joined Employers Council in 2019 as an employment law attorney. She currently advises members on employee situations from hiring to termination, and represents members in claims filed with state and federal agencies. Her prior experience includes retirement and benefit plan consulting as well as non-profit and corporate management.