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Salt in the wound: Unemployment fraud victims getting surprise tax forms

Some unemployment fraud victims are receiving 1099 forms from the state.

SEATTLE — Some unemployment fraud victims in Washington state are being victimized for a second time. 

First, they had their identities stolen by thieves. Now, they might have more hassle from the state as the Employment Security Department (ESD) tries to sort out real claims from the fake ones.

A few weeks ago, the ESD began sending out 1099 forms to those who received money from unemployment during 2020. It looks similar to a W-2 but it's called a 1099. If you receive one in the mail from the Employment Security Department and you did not file for unemployment this year, you may have been the victim of fraud.

Most fraud victims, who were able to report the problem and get their cases resolved will not get the form.

Congresswoman Jamie Herrera Butler said she's hearing from fraud victims who thought they resolved their cases with the Employment Security Department and they still got a 1099 in the mail.  She is pushing ESD to correct mistakes and make sure victims of fraud are not reported to the IRS as people who got money from unemployment in 2020.

The state said those with an open fraud investigation may get a form and that they will get another one when their investigation wraps up. ESD says if you fall in that category do not file a new investigation. But if your case was resolved and you receive a form, you need to contact the department.

"This is serious, people, because what it means is the government is reporting you were paid this money to the IRS and that's like a W-2,” Richard Epstein with the BBB said. “You can have to be paying taxes on that money that you never received." 

This is a problem that states across the country are dealing with. The IRS said if you’re trying to get a corrected 1099 and tax day comes you do not have to file your taxes with this form but you do have to go through the process to get this corrected.

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