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Governor Scott expedites response to Vermont Department of Labor tax form error

Submitted by tim on

Dispatches senior officials to address immediate needs; requests performance audit from State Auditor; appoints new deputy commissioner

Vermont Business Magazine Governor Phil Scott on Wednesday took additional actions to address and correct the tax form errors announced by the Vermont Department of Labor on Monday.

Specifically, the governor has dispatched two senior-level tactical response teams to VDOL to expedite the response to the 1099-G tax form errors; asked State Auditor Doug Hoffer to conduct a performance audit to identify the root cause of the error and provide recommendations for long-term quality control improvements; and he has appointed a new deputy commissioner to help lead the department.

As of Friday, Scott said they believe that human error was the cause of the mailing issues. They are looking at why there were not quality control protocols sufficient to catch the errors. The department was informed of the problems by recipients of the 1099s.

VDOL reported Monday that of the 80,000 1099-Gs that were issued as of Monday some number were sent to the wrong address, possibly exposing individual information, including Social Security numbers.

VDOL typically process only 6,000 to 8,000 1099s in a given year, but between the spike in unemployment claims because of the pandemic and new programs like the PUA, VDOL will send out about 180,000 forms. Individuals likely will get more than one. The regular UI forms have not been sent.

In total, the Labor Department will issue about 180,000 1009-Gs.

The forms in question were mailed at the end of last week. VDOL will be sending out SASEs for people to return all the forms they received, whether they appear correct or not. They are also urging claimants not to open the forms and to keep them in a secure location until they can be sent back.

Tactical Response Teams

The first of two tactical teams, the Response Coordination Team (RCT), will focus on expediting recovery of the incorrect 1099-G forms; the timely delivery of correct forms; and improved, consistent communication to impacted Vermonters and legislators. The RCT will also support other department projects and operational needs as necessary.

This team includes:

  • Brittney Wilson, deputy chief of staff, Governor’s Office
  • Doug Farnham, chief of operations, Agency of Administration
  • Shawn Nailor, deputy secretary, Agency of Digital Services

The second tactical team, the Consumer Protection Team (CPT), will work in consultation with the Attorney General’s Office to provide information and access to protections from fraud or other illegal activities to any Vermonter whose information may have been compromised.

This team includes:

  • Kristin Clouser, deputy secretary, Agency of Administration
  • Jaye Pershing Johnson, the Governor’s Legal Counsel

The Governor’s Deputy Chief of Staff Brittney Wilson will lead both teams and report directly to Governor Scott on a daily basis until each team has completed its mission.

Michael Harrington is still VDOL commissioner.

Request for Performance Audit

Governor Scott has also requested that State Auditor Doug Hoffer conduct a performance audit. The Governor’s goals for the audit include identifying the root cause of the error, long-term quality control improvements, and other performance improvement opportunities and best practices.

“State agencies and departments have a responsibility to Vermonters to deliver excellent service and to safeguard their information. This incident does not meet those standards, and we must do all we can to make this right for Vermonters,” said Governor Scott. “These actions will provide more resources and the expertise needed to resolve this issue as quickly as possible and implement new processes to avoid this type of error in the future. I also thank Auditor Hoffer for agreeing to assist with this important effort.”

New Deputy Commissioner

Lastly, the Governor is also appointing senior advisor and former Franklin County state senator Dustin Degree as deputy commissioner at the Department of Labor. Degree currently serves as a special assistant to the Governor and executive director of the State Workforce Development Board.

“Dustin has helped to lead our focus on growing and strengthening the workforce for several years and will bring additional leadership to the department as they work to rectify the current situation, modernize their business processes and refocus on supporting the needs of working Vermonters and Vermont’s long-term economic growth,” added Governor Scott. “I want to thank Dustin, and this entire team, for stepping up to help Vermonters impacted by this error.”

Important Reminders:
  • If you have received a 1099-G from the Department of Labor, please keep it in a safe place until you receive a prepaid, self-addressed envelope from the Department.
  • If you believe your 1099-G document is correct, please do not file your taxes. The Department is requesting all documents back so we can be sure you have accurate information.
  • The Department is setting up consumer protections, like identity theft and credit monitoring services, those details will be mailed directly to you.
  • The Department is validating all 1099-G information to ensure the Department provides claimants with valid and accurate 1099-G documents. You will be notified when the new 1099-G documents are mailed.
  • We will continue to provide you with updates.

You can contact the three major credit reporting bureaus listed below at any time and place a temporary freeze on your credit. A credit freeze restricts access to your credit report, which can make it difficult for identity thieves to open new accounts in your name.

[February 4, 2021]

If you received a 1099-G from the Department of Labor, please read the following:

  • The form you received may contain incorrect or incomplete information and someone else’s personal and private information.
  • Please keep those documents in a safe place until you receive a prepaid, self-addressed envelope from the Department.
  • Even if you believe your 1099 is correct, please do not use it to file your taxes. The Department is recalling all 1099s to ensure other mistakes have not been made and to protect your identity. Forms will be corrected and reissued by the Department by the end of the month.
  • We’re setting up consumer protections for those affected and further details will be mailed directly to claimants.

We understand how unsettling this can be and we’re deeply sorry for any undue harm. We’re hopeful that Vermonters who have received the wrong information due to our error, will choose to protect it as if it were their own. Vermonters take care of one another, and we need to do that now.

[February 3, 2021]

If you have received a 1099-G from the Department of Labor please keep the document until you get further guidance. Claimants will be receiving a self-addressed envelope to return the incorrect 1099. Replacement 1099s will be sent by the Department.

***Please note, these steps apply ONLY to forms sent by the Department of Labor, and not to other State of Vermont 1099s (those sent by Department of Tax, etc.)

In addition to correcting the information, we will make sure consumer and identity protections are in place. More details on who and how to get protected, will be forthcoming.

[February 2, 2021]

On Monday, February 1st at approximately 9:30am the Department of Labor began receiving reports regarding discrepancies involving 1099G tax documents that were issued by the Department for unemployment insurance benefit purposes. Upon further review of the reports that were coming to the Department, we learned that individuals were receiving 1099G tax documents where the name and mailing address did not match on the front of the envelope and in other cases where the name and social security number on the inside did not match the recipient. Additionally, we believe that in certain cases individuals may have received another claimant’s name and social security number.

As of now, the Department believes this issue is specific to the 1099s that were associated with the Lost Wages Assistance (LWA) program and a portion of the Vermont Short Term Supplemental benefit population; however, the Department is issuing a mass recall of ALL 1099s that have been mailed, regardless of program. This is being done out of an abundance of caution. The Department will be mailing further instructions to everyone who received a 1099, along with a self-addressed stamped envelope, to return the incorrect 1099 to the Department.

In addition, recognizing that there is the potential of the improper release of confidential and personal information, the Department has already been in contact with the Vermont Attorney General’s Office in accordance with state statute, and we will be providing all impacted individuals with the option to enroll in ID protection services. This improper release of data did not occur in every instance, but for those cases where an individual’s information was released, they will be provided the opportunity for identity protection. More specific information will be provided in a mailing to impacted individuals along with further instructions.

Next Steps for Individuals

We are still in the midst of investigating this issue, the cause of the issue, and the next steps for impacted individuals, but in the immediate, individuals should do the following:

  • If an individual receives a 1099 letter from the Department and the name and address on the front do not match, they should not open the 1099. The Department will mail them further instructions for returning the 1099.
  • If an individual receives a 1099 letter from the Department and the name and address on the front do match, but when they open the 1099, the information on the inside does not match their information, they should hold onto the 1099. The Department will mail them further instructions for returning the 1099.
  • All claimants will receive a new 1099G tax document from the Unemployment Insurance Division.
  • If there is even the possibility that an individual’s confidential information was improperly released, the Department will mail them instructions for protecting their identity and how to enroll in consumer protection services through the Department.
  • This issue does not impact an individual’s claim or benefits. This issue is specific to the printing and mailing of 1099 tax documents.
  • No incorrect tax information has been shared with the state tax department nor the IRS. The Department will ensure that correct 1099 tax information is sent to the tax department and IRS for proper tax reporting.
  • More information will be posted to the Department’s website at labor.vermont.gov.

Compromised Data and Protecting Your ID

The Department is currently working to identify the population of individuals whose identities were compromised, or likely compromised, and once that list is complete, the Department will mail those individuals instructions for protecting their information and how to enroll in ID monitoring services through the Department. In the meantime, below are some easy ways for individuals to prevent and detect potentially fraudulent activity.

Source: Montpelier, Vt. - Governor 2.3.2021 www.vermont.gov