It is important to understand what a Form 1099-G is and when it is issued. An IRS Form 1099-G is issued when federal, state and local governments pay someone any of the following:
- Unemployment compensation
- State or local income tax refunds, credits or offsets
- Re-employment trade adjustment assistance payments
- Taxable grants
- Agricultural payments
Unemployment benefits and state and local income tax refunds are the most common reasons an employee would receive a 1099-G. By law, these forms are sent to employees by January 31. After an employee files their tax returns, they could receive correspondence from the IRS regarding unreported UI benefits or a notice of State or Federal tax offset. This could be another indication that a fraudulent unemployment claim may have been filed.