IDES Unemployment Fraud: How to make sure you won't be taxed on stolen benefits

CHICAGO (WLS) -- Victims of Illinois unemployment fraud could have money the state says they owe taken out of their taxes. Here are the steps victims can take to clear their names.

Claire Kramer believes she's the latest victim of unemployment fraud in Illinois, and to add insult to injury she's being asked to pay money back from benefits she never received.

RELATED: Illinois unemployment fraud reporting link on IDES website disappears

Kramer said she received a letter from the Illinois Department of Employment Security stating her unemployment benefits had been denied. She was understandably confused.

"I have never in my life filed for unemployment," Kramer said.

She said she received three more letters from IDES regarding unemployment benefits, and then another saying she owed the state $332 and if she didn't pay the state would deduct and withhold her state income tax refunds.

"This is crazy. I never applied for unemployment and never received benefits," she said. "I've never contacted any of these people, how can they be sending me this?"

The ABC7 I-Team has been investigating fraud impacting the state's unemployment system over the last several months, and with every story shared more people come forward claiming to be victims of an unemployment scheme.

RELATED: IDES fraud scheme: Some victims fear they could be financially responsible for fake claims issued in their names

IDES told the I-Team that the overpayment notices sent to people who have had their identities stolen to file for benefits are a result of the department's automated system continuing to process paperwork.

"Individuals who have reported an unemployment insurance claim filed in their name to IDES as fraud should ignore this correspondence and will not be responsible for paying back these funds. When fraud is reported to IDES and an investigation has been conducted and completed, the Department will tag the claim as fraudulent. At the end of the year, 1099s associated with claims that have been tagged as fraud will not be sent to the IRS," the department said.

But in addition to reporting the fraud to IDES, tax expert Chad Elkins said victims need to take more steps to ensure the benefits don't show up on their taxes.

"Document everything," Elkins advised. "Any correspondence that you have, whether it's with Illinois, the FTC, there has to be a solid record of this because every case has to be investigated."

RELATED: Illinois unemployment system experiencing unprecedented fraud, IDES acting director says

"If you're unable to clear it by the time tax season rolls around, you are going to get a form 1099-G, which is reported to the IRS," he added.

And if you do receive a 1099-G form but never applied for unemployment, you'll need to file a tax extension to give more time to dispute the fraud.

For Kramer, she said it's all just too overwhelming but she hopes the state gets it corrected soon, before it's taken from her state income taxes.

"I need that money," she said.

Kramer said she heard back from the state of Illinois about two weeks after reporting the fraud and was told they would be investigating her case. Meanwhile, IDES maintains that when a fraud investigation is completed, at the end of the year, 1099s associated with fraud claims will not be sent to the IRS.
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