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  1. #1
    Join Date
    Jan 2014
    Posts
    5

    Default Failure to Report Self-Employment Income While Collecting Unemployment

    My question involves workers compensation law for the state of: New Jersey.

    Toward the end of 2012 I applied for and received New Jersey unemployment insurance. During that same time, I began working as an independent contractor for a person (in another state) who has now sent me a 1099-Misc (8 months late). I am also not a resident of New Jersey. I never indicated to unemployment that I was working a 1099 job nor did I pay into my 1099 quarterly taxes. The amount of UI I collected in 2012 is approximately $3,000. I realize this is not right and I am coming to terms with it because of a guilty conscience, so please read below if you think you can provide unbiased advice.

    I continued working as a sub-contractor into early 2013 and also collected a very small amount in unemployment insurance for the 2013 year, before it ran out. I never applied for an extension.

    Now I've recently gone to a CPA who is getting my taxes squared away so that I can pay all back-taxes, interest and penalties, but my concern is how the 1099 activity (now that it is being reported to the IRS) will reflect on my decision to collect unemployment insurance. Do the state agencies and IRS communicate?

    Obviously the 1099's do not list dates so it can appear that I may have collected while not working a 1099 position (or vice versa) but is this something the agencies deal with frequently enough to investigate? Between working in two different states and residing in the one that I was not collecting from, do I have to fear any type of recourse from all of this? If so, what is my best option? I would be willing to surrender myself and pay back all unemployment benefits to avoid prosecution or civil penalty, but I really don't know where to begin here. I suspect that my previous employer is either undergoing or will undergo an audit and I'd rather my name be free from his situation if and when it does happen.

    It's important to note that I have received no correspondence from the IRS and a tax transcript check (my CPA completed) reveals no taxes or interest owed, though I did just receive the 1099 the other day. Is it possible that my employer never submitted the 1099 to the IRS?

    I wasn't quite sure if this is the right forum for my issue so if a mod feels it needs to be moved please do so.

  2. #2
    Join Date
    Sep 2011
    Location
    OH10
    Posts
    17,019

    Default Re: Having Collected UI While Working a 1099, I Need Advice Regarding the Law

    You committed willful fraud. Where do you think UI computers pull up your wages from? I suggest you contact them and repay the overpayment or risk jail time.

  3. #3
    Join Date
    Jan 2014
    Posts
    5

    Default Re: Having Collected UI While Working a 1099, I Need Advice Regarding the Law

    Disagreeable,

    That is exactly what I feel inclined to do, however, I am curious to know if the process of surrendering myself will alleviate me from arrest and criminal prosecution.

  4. #4
    Join Date
    Sep 2011
    Location
    OH10
    Posts
    17,019

    Default Re: Having Collected UI While Working a 1099, I Need Advice Regarding the Law

    Generally, my understanding is if you were not aware you were breaking the law, they just want their money back without incurring court costs. As always you should consult a lawyer before admitting to any potential criminal action.

  5. #5
    Join Date
    Jan 2014
    Posts
    5

    Default Re: Having Collected UI While Working a 1099, I Need Advice Regarding the Law

    I will be calling a lawyer first thing tomorrow. Hopefully I can settle this.

    If anybody else has insight into the matter, it would be much appreciated.

  6. #6
    Join Date
    Jun 2006
    Location
    Massachusetts
    Posts
    24,521

    Default Re: Having Collected UI While Working a 1099, I Need Advice Regarding the Law

    They are much more interested in collecting the funds due them than they are in prosecution. If you self-identify as having wrongly collected funds and are prepared to make restitution, they are unlikely to take any further action. If you wait until they find it for themselves (and yes, they are in close contact with the IRS - it's not if they find it themselves, it's when they find it themselves) they are much more likely to be looking at prosecution.

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