This week Senate Republican Leader-elect Scott Wilk (R-Santa Clarita) and members of the Republican Caucus delivered a letter to Gov. Newsom urging him to implement the California State Auditor’s recommendations on addressing consequences of Unemployment Insurance (UI) fraud by mid-February to ensure victims receive assistance immediately in order to avoid tax liabilities for benefits they never received. Media can read the press release here and letter here.
By ADAM BEAM
Associated Press
Sacramento, CA - Unemployment agencies across the country became lucrative targets for criminals when they were bombarded with claims last year as millions lost jobs due to coronavirus shutdowns.
Now, simple tax forms being sent to people who never collected unemployment benefits are revealing their identity was likely stolen months ago and used to claim bogus benefits that have totaled billions of dollars across the country.
In California alone, state officials say the fraud totaled at least $11 billion and likely much more.
Unemployment benefits are taxable, so government agencies must send a tax form — known as a 1099-G …
… By November, states across the country said they had paid as much as $36 billion in improper benefits, with a significant portion obtained through fraud …
The fraud is so widespread that California issued payments to someone using the name of U.S. Sen. Dianne Feinstein, and in Ohio, Republican Gov. Mike DeWine, his wife, Fran, and Republican Lt. Gov. Jon Husted after all learned that fraudulent claims were filed in their names.
Now, unemployment agencies could face another onslaught — this time from people requesting corrected tax forms. …
The problem could be most acute in California, where officials mailed close to 8 million tax forms last month — more than five times the number they send in a normal year. …
Rooting out fraud and identity theft has been an ongoing struggle for the [EDD] agency. A state audit released last week showed that from April to October, it [EDD] responded to less than 2% of fraud reports. By November, it [EDD] had a backlog of more than 77,000 such reports. …
But state lawmakers worry the agency might not be able to handle the workload. Republican state Sen. Scott Wilk said one of his constituents was “dumbfounded” to get a notice that he owed taxes on $11,000 in unemployment benefits.
“In a time when we really need people to have confidence in their government, going through this pandemic and rolling out the vaccine, the last thing we need to do is additionally shatter their confidence in our ability to be competent,” Wilk said.
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