EDD tax forms begin to go out, including to victims of ID fraud
You may have a tax bill and have no idea due to massive fraud
You may have a tax bill and have no idea due to massive fraud
You may have a tax bill and have no idea due to massive fraud
A bill may be coming to your mailbox and you might have absolutely no idea it is coming.
California's Employment Development Department, or EDD, has sent out millions of tax forms, even though hundreds of thousands of fake accounts were set up using stolen identities.
In spite of months of warning from, first, KCRA 3 Investigates and then legislators and the California state auditor, the forms are now hitting California mailboxes.
"Back in August of this last year I applied for unemployment and then got a letter saying that I qualify for unemployment," Anthony Villegas said. Villegas worked for a Central Valley school district and was laid off in 2020 due to the COVID-19 epidemic. "My first check was to arrive Aug. 8."
Villegas' check actually never got to his mailbox. His identity was stolen, his address changed, and someone else took his checks and cashed them. He said he told EDD about the fraud but still never got paid.
"I contacted EDD and they said, yes checks had been delivered, and they asked me for my information saying that name was correct, but the address was wrong," Villegas said.
After six months he finally did get a letter from EDD in his mailbox but it wasn't an unemployment check. It was a tax form saying he'd been paid by EDD.
"$1,400 and that's kind of an insult to injury," Villegas said. "Didn't get a check from them."
EDD has verified that they are sending out nearly 8 million tax forms. Some of them are going to people who received benefits and owe federal taxes on them. But some of them are going to applicants like Villegas, who never got a dime from EDD. Some of them are also going to people who never even applied for unemployment themselves and have no idea their identities have been stolen.
| More | EDD backlog and fraud timeline: How we got here
That's because EDD is still trying to figure out which claims are real and which ones are straight out fraud.
"My biggest worry is my upcoming income taxes," Villegas said. "I'm wondering now if that's going to be messed up because these people have a different address."
After seeing our ongoing KCRA 3 Investigation, Villegas called Modesto Democratic Rep. Josh Harder.
"The bad news is it's going to take them way too long to fix it," Harder said. "The director's saying that it could take until June or later to fix some of the issues with these fraudulent accounts. That's not acceptable, because people like Tony are getting these 1099 'G' forms, asking them to pay taxes on these benefits even now."
Harder said with all the problems inside EDD the IRS needs to step in and help.
"I wrote them a letter weeks ago, identifying this was going to be a risk," Harder said. "I'm going to continue to work with the U.S. Treasury Department to better identify who these potentially fraud accounts have targeted to make sure that those folks don't end up getting a tax liability that could be sent to the wrong address, as KCRA reporting has shown."
Many of those tax forms may go to the wrong address, meaning the address the fraudsters used to get unemployment money. That also means many people won't even know they were victims until months after filing their taxes and the IRS tells them they owe more money.
"EDD has a terrible track record at fixing its problems," Harder said. "The IRS, obviously, is this huge bureaucracy that takes a lot of time to move. But April 15, it's going to be here before we know it. We should have gotten started a year ago, we should have gotten started before, but the least we can do is move as quickly as we can right now."
To act quickly, Harder wants EDD and the IRS to create a task force so the tax agency has a list of every account flagged for fraud in order to stop the tax bills from hitting ID theft victims.
Both EDD and the IRS are saying if someone gets these tax forms, but never got unemployment aid, they should not declare the income on their taxes because, eventually, EDD will catch up and fix those accounts. Tax experts, though, say that given EDD's track record, it may be best to file an extension until the department does fix your account.
If you received one of these tax forms, let us know at kcrainvestigates@kcra.com.