Arizona Department of Revenue Warns of Unemployment Fraud Tax Form

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PHOENIX – The Arizona Department of Revenue is warning residents are receiving an unexpected unemployment benefit tax form that is likely due to a fraud scheme.

The department asks those who received Form 1099-G for unemployment benefits that they did not request to contact the Arizona Department of Economic Security to obtain a corrected form.

In Arizona and across the country, some taxpayers have fallen victim to scammers who have stolen personal information and then filed unemployment claims for themselves.

Unemployment benefits are taxable, so government agencies send the form to people who received them so they can report the income on their tax returns.

States are sending 1099-Gs in droves this year after processing and paying a record number of claims due to the coronavirus pandemic.

Nearly 26 million people applied for unemployment aid in the first few months after states began ordering shutdowns.

The unprecedented wave has strained unemployment bureaus which are governed by federal rules but patchwork administered by state governments, many relying on software from the 1960s to process claims and issue payments.

The federal government, as part of its $ 2 trillion relief plan approved in March, has significantly expanded unemployment assistance, making it a richer target for fraud.

In November, the Office of the Inspector General of the United States Department of Labor estimated that states had paid up to $ 36 billion in abusive compensation, a significant portion of which was blamed on fraud.

The Associated Press contributed to this report.

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