What happens if you file your 2020 tax return and your SSN was used as part of the 36 billion+ in fraudulent unemployment claims paid in 2020?

zizi

OT Supporter
Jan 11, 2005
7,205
Is the IRS going to reject your return because you didn't report the unemployment income they have on file with your SSN that was paid to fraudsters? Are the states going to go after you for money they paid to scammers?


How scammers siphoned $36B in fraudulent unemployment payments from US
Nick Penzenstadler, USA TODAY
Updated 3 hours ago

In a Zoom session with the camera turned off, Mayowa describes how he scoops up U.S. unemployment benefits fattened by COVID-19 relief, an international imposter attack that has contributed to at least $36 billion being siphoned away from out-of-work Americans.

Mayowa is an engineering student in Nigeria who estimates he’s made about $50,000 since the pandemic began. After compiling a list of real people, he turns to databases of hacked information that charge $2 in cryptocurrency to link that name to a date of birth and Social Security number.

In most states that information is all it takes to file for unemployment. Even when state applications require additional verification, a little more money spent on sites such as FamilyTreeNow and TruthFinder provides answers – your mother’s maiden name, where you were born, your high school mascot. Mayowa said he is successful about one in six times he files a claim.

“Once we have that information, it’s over,” Mayowa said. “It’s easy money.”

Mayowa agreed to take USA TODAY inside the fraud in an interview arranged by security firm Agari, using only his first name to hide his identity. The security company gives him another source of cash: It pays him in Bitcoin to provide information about active scams.


Coronavirus-era unemployment fraud was first identified in the state of Washington in May and since has spread to all 50 states, skipping to new targets as government agencies plug holes exposed by the massive scams. Mayowa and his crew of foreign scammers focused in November on Hawaii, Florida and Pennsylvania.

In addition to the crushing volume of legitimate claims during COVID-19 and public pressure to speed up payments, mobile banking apps and prepaid debit cards issued by some state unemployment offices paved the way for fraud this year, security experts said.

The step-by-step playbook the scammers follow is shared on Telegram, an app that provides cloud-based anonymous messaging and acts as an internet bulletin board of tips and questions.

Asked whether he feels bad about stealing from unemployed Americans, Mayowa pointed out that 70% of his peers in school are working the scams as side hustles, too.

“No, no remorse,” Mayowa said. “We don’t know them. We don’t know who they are; it’s nobody.”
 
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nosaj

OT Supporter
Nov 10, 2003
96,003
Hopefully the scammers had taxes taken out. Other wise your gonna owe big.
 

turbo35

haters gonna hate
May 8, 2001
95,782
Seattle-ish, WA
Did it get fixed? I had my ssn used for unemployment, I contacted the dept and filed an affidavit saying it wasn't me (different address etc) and they said it was reversed and no income would associated with my ssn.
 
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zizi

zizi

OT Supporter
Jan 11, 2005
7,205
Hopefully the scammers had taxes taken out. Other wise your gonna owe big.
Taxes weren't taken out of the $600 extra each week even if you opted to take taxes out which I doubt the fraudsters did.

One problem this year is that even when people opted for withholding, EDD withheld nothing from the extra $600 per week that everyone on unemployment got from April through July, nor from the extra $300 added to benefits for six more weeks. Those extra federal benefits alone amounted to as much as $12,000.

 
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zizi

zizi

OT Supporter
Jan 11, 2005
7,205
Did it get fixed? I had my ssn used for unemployment, I contacted the dept and filed an affidavit saying it wasn't me (different address etc) and they said it was reversed and no income would associated with my ssn.
How did you find out your SSN was used to file a UI claim? Your employer?
 

Wolf

Slow Suicide's No Way To Go
OT Supporter
Mar 23, 2003
116,975
San Jose, CA
Did it get fixed? I had my ssn used for unemployment, I contacted the dept and filed an affidavit saying it wasn't me (different address etc) and they said it was reversed and no income would associated with my ssn.
This. It's the same as if someone steals your credit card number and runs up charges. There are processes in place to rectify it.
 
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zizi

zizi

OT Supporter
Jan 11, 2005
7,205
This. It's the same as if someone steals your credit card number and runs up charges. There are processes in place to rectify it.

Fixing credit card fraud is relatively easy because it's your account, unless the account was opened up without your authorization, and it also doesn't have implications with the IRS and state tax agencies in terms of unreported income.

The problem is there are probably millions of victims who don't know their SSN was used to file for Unemployment, and probably won't if/until the IRS rejects their tax return, so one can imagine how much of a mess it will be to fix in 2021 with Unemployment Offices slammed as much as they already are.
 
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Wolf

Slow Suicide's No Way To Go
OT Supporter
Mar 23, 2003
116,975
San Jose, CA
Yeah the problem is there are probably millions of victims who don't know their SSN was used to file for Unemployment, prob won't until the IRS rejects their tax return, and you can imagine how much of a mess it will be to fix in 2021 with Unemployment Offices slammed as much as they already are.
This isn't some new thing this year. Fraud occurs in every program.
 
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zizi

zizi

OT Supporter
Jan 11, 2005
7,205
This isn't some new thing this year. Fraud occurs in every program.
Not anywhere close to this scale. The pandemic allowed anyone to file for UI so the scammers just filed as Independent contractors, normally contractors are not eligible for UI, so no employer or income verification was needed.
 

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