LAS VEGAS (KTNV) — Elliot Epstein is one of the lucky ones.
He doesn’t need government money.
His business has taken off, getting bigger and better as the pandemic drags on.
"With people stuck at home, there's been a lot of resurrection in people buying puzzles, paint by numbers, and we're in the model airplane business."
And these days, more collectors are into the tiny tin. So, Epstein knew something was fishy when he received a letter from the Department of Employment, Training and Rehabilitation at his shop.
"And the letter was addressed to me as the business owner for the employee, who was me."
Another came to his home saying he was eligible for $483 a week in unemployment benefits he never applied for.
"It was just kind of shocking when I was reading this saying, what is going on here?!"
He tried to call DETR to stop them from sending any payments.
"I could not get through to DETR. No matter what I did, they bounced me around. There was no provision for my problem."
DIGITAL EXCLUSIVE | 13 Chief Investigator Darcy Spears answers more questions related to the issues and provides some additional context on her reporting. Watch below.
He hasn’t received a payment, but worries DETR thinks he did.
That leads to the next concern: DETR sent out all its 1099 tax forms to the IRS at the end of January.
"And it's going to be my headache to unravel with the federal government, which I think is going to be a massive problem."
"It's just going to be a mess for everybody," said Certified Public Accountant Kelly Tate. "I've received two of these so far and we're barely starting to get stuff to do personal tax returns."
"This is a 1099 that one of my taxpayers got for $10,125 from the state of Pennsylvania," he said. "They don't live in Pennsylvania. Haven't lived there for years. And now they've got more than $10,000 they're supposed to report on their personal income tax return."
"There's certainly potential for muddy water," said Special Agent in Charge Tara Sullivan of the IRS Criminal Investigation Division. "As you know, a lot of people fell victim to these unemployment scams and so when the scammers receive money in the victim's name, the IRS doesn't know the difference upfront."
That's what worries Milissa Fisch as manager of her husband's Henderson medical practice, Green Valley Fertility Partners.
"I'm going to have to do extra steps that I shouldn't have to take."
She's still trying to unravel something that began in the summer when a fraudulent claim was filed in her husband, Dr. Jeffrey Fisch's name.
"We contacted them on July 15, the day we received the notice, and told them this is a fraud claim, at no point was he unemployed, no payment should be issued. At that point, the person we spoke with in the fraud unit informed us that they had paid the claim. They sent a check--or actually a debit card--for more than $7,900 to an address in Indiana."
"There's a question of whether the state is doing its due diligence to make sure a claim is legit before paying it, and if not, are you a part of the problem?" Darcy Spears asked DETR Director Elisa Cafferata.
"Right, so, at the beginning of the pandemic there was a great deal of pressure to get payments out to folks," Cafferata said, explaining that as a result, the traditional waiting week for employers to respond was waived for awhile.
But Dr. Fisch's situation in July was four months into the pandemic.
"I believe we were waiving the wait week, as we call it, still then, so a payment might have gone out, they reported the fraud and then the payments were stopped. So that is the due diligence," Cafferata said.
The fraudulent nearly $8,000 payment in Jeffrey Fisch's name, with his social security number, is logged in his employer account with DETR.
Milissa now worries they'll be on the hook to pay taxes on money they never got.
"What I will have is a tax return that gets flagged by the IRS," she believes.
"The IRS is aware of the magnitude of this issue across the country, so how many of these they will pursue, I really don't know," Cafferata said.
SAIC Tara Sullivan says, don't expect anything to be different.
"That's taxable and needs to be reported, so the individual is now gonna have to go back to the state and get the state to file a corrected 1099-g to show to the IRS that they didn't actually receive that money."
Easier said than done, acknowledges Cafferata.
"Because of the level of fraud, there will be a huge number of folks who need corrected 1099s, so it's gonna take us some time to get through those and, as always, we're balancing our priorities and continuing to keep going with applications and backlog as the top priorities."
"Bottom line is that the IRS is telling you to go back to the state, but the state is going to say this will not be easy and it will not be quick?" Spears asked.
"Yes. That's the bottom line," said Cafferata.
DETR and the IRS say on your tax return, you should report what you actually got, but that raises a red flag for CPA Kelly Tate.
"These are going to be a real problem for a lot of people because if you don't report this, you're gonna get a notice from the IRS because they're going to match it up and it's not going to match."
Taxpayers who request a corrected 1099 from DETR are in for another delay as Cafferata says, "We do have to investigate those as well so it will take some time."
During that time, victims can file a fraud report on DETR's website and print out a form to send to the IRS with their tax return.
On the federal side, Sulivan says "Victims should request an identity theft protection PIN from the IRS. And that's going to be their first step in showing the IRS that they were victims."
DETR says it may be a year before the IRS contacts taxpayers to deal with discrepancies.
Tate says, "The other part, too, is that if the IRS gets a return and things don't match, they will sometimes hold a refund."
And it doesn’t end there.
DETR also acknowledges it has sent inaccurate tax information to the IRS for legitimate unemployment (UI) and Pandemic Unemployment Assistance (PUA) claimants.
"We're aware that in certain situations, because these claims are so complicated and sometimes payments were stopped and then re-started, that the 1099 might not reflect the accurate amount," Cafferata said, adding that there are likely to be issues for people whose payments were adjusted after they started getting paid.
"And also, if there was an overpayment, people might have paid us back and that might not be reflected in their 1099, just for timing reasons."
Back at Elliot Epstein's model airplane shop, he says, "It's a state problem. This is incompetence. And these kinds of things tend to not clear up easily."
"DETR compromised me!" echoed Milissa Fisch.
Both are bracing for the battle ahead.
There's a bill pending in Congress that would exempt the first $10,200 in unemployment benefits from income tax in 2020. But any action will likely be too little, too late.