February 26, 2021

After data breach, new 1099s en route to unemployment insurance claimants

Michael Harrington, interim commissioner of the Department of Labor, discusses the state’s backlog of unemployment…

Michael Harrington
Michael Harrington, interim commissioner of the Department of Labor, discusses the state’s backlog of unemployment claims at a press briefing on April 17, 2020. Photo by Mike Dougherty/VTDigger

Unemployment insurance recipients affected by the state’s emergency recall of 1099 tax forms can expect new forms to begin arriving in their mailboxes next week, state officials announced at a press conference Tuesday. 

The Department of Labor is working this week to finalize validation of all 180,000 new forms and will work with the Department of Buildings and General Services to mail them to claimants by the beginning of next week, officials said.

“I know that claimants are eager to receive their new 1099 documents from the Department,” said Labor Commissioner Michael Harrington. “Ensuring the information is the best it can be has been our top priority for the past three weeks.”

Many Vermonters collected unemployment insurance benefits from multiple programs in 2020. Beyond the two base programs of regular unemployment insurance and pandemic unemployment assistance, claimants could receive an additional 1099 through the Lost Wages Assistance Program, the Vermont Short Term Supplemental Benefit and other programs.

Those who collected benefits from more than one program should expect to receive more than one form in the new shipment, and some could receive as many as four forms, according to Harrington.

“This is intentional, and is not a mistake or error,” the commissioner said. 

By now, all 2020 unemployment claimants have also been mailed a letter with instructions on how to enroll in identity theft protection services being offered by the state, according to Harrington. So far, he said, he knows of no cases of identity theft resulting from the data breach.

Harrington expects that most recipients will receive the letters by the end of this week. Claimants have until May 18, 2021, to enroll in those protection services, and the protection is retroactive to Jan. 29. 

Sending claimants their 1099s this week puts the state on the timeline Harrington set as a goal earlier this month: mailing the forms by the week of Feb. 22. 

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The 1099 forms had to be reissued due to a major data breach. Thousands of the original forms contained incorrect personal information — including the wrong individuals’ Social Security numbers, names and addresses — when they were sent to unemployment insurance claimants on Jan. 29. The state started receiving reports of faulty information three days later.

Gov. Phil Scott’s office took action Feb. 3 to help the labor department manage the impact of the breach, as Scott appointed two teams to help recover the incorrect forms and issue the correct ones, and to improve communication about the incident to Vermonters and lawmakers. 

The Department of Labor issued a mass recall of all 180,000 forms that it printed — most of which were never mailed. Officials estimated earlier this month that anywhere from 25,000 to 44,800 forms had contained faulty information. 

If claimants have received return envelopes to recall their 1099 but did not receive the form itself in the first shipment, it’s likely that their 1099 was stopped before it could be delivered, “which is good news,” Harrington said Tuesday.

He apologized again for the massive breach.

“I do want to take a second and take this opportunity to again apologize to those who have been impacted by this incident, but also to say thank you for being patient with us as we work to resolve this issue as quickly as possible,” Harrington said. “I know this has been unsettling and it’s caused additional stress and worry during a time where there is already so much uncertainty.”

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