PHOENIX - During the week of Feb. 1, the Arizona Department of Economic Security, which handles unemployment in the state, will start sending out hundreds of thousands of tax forms for those who received unemployment.
Under the applicable tax laws, unemployment is considered taxable income, and when fraudulent accounts are opened in someone else’s name, the victim may now be told they owe the taxes. Now, Many people are about to find out they have fallen victim to identity theft.
One of those victims is Janna Sheski. She lives in far northern Michigan, and she says she has never been to Arizona, and has no connections to the state. Perhaps understandably, she was confused by an e-mail she received from DES in October 2020, saying her unemployment account had been updated.
"I called the Arizona unemployment office, and sat on hold for hours trying to get somebody," said Sheski.
Sheski later got curious, and looked up the address filed under her name. It’s on Country Club Drive in Mesa, but it doesn’t actually exist. The address is located somewhere between a T-Shirt shop and a taco stand.
DES' director estimates the state paid out hundreds of millions in fraud. They have started a crackdown effort in July, and are still rolling out fraud prevention measures. In the meantime, many accounts were opened in a victim's name.
"Especially when it’s somewhere I have no connection, it’s so far away," said Sheski.
In September, officials with DES told FOX 10 that only 33% of recipients withhold taxes, so next week, many will receive letters about what they owe the government. That will include those who never filed, but still had accounts in their name receiving money.
DES officials say people should alert them immediately if they receive a tax letter and didn’t collect unemployment. They said they will amend or void the information.
"It’s kind of overwhelming, you know," said Sheski. "I’ve had to apply for unemployment myself legitimately. That’s bad enough as it is, let alone somebody else filing under my maiden name," said Sheski.
It is unclear how many people will receive these letters next week because of fraudulent claims, but officials with IRS say they are working on providing information about what people should do in the next few days.
STATEMENT FROM DEPT. OF REVENUE:
"The Arizona Department of Economic Security has shared information on the fraudulent UI claims with Arizona Department of Revenue. ADOR will use this information to minimize the downstream implications on individual income tax returns.
Taxpayers are encouraged to file early and file electronically. But if there is an issue with a taxpayer's refund, we instruct taxpayers to fill out an Identity Theft form."
Report Identity Theft to Arizona Department of Economic Security: