Pennsylvania Residents Fear IRS Audit After Unemployment Errors

In the summer of 2020, Annette Ravinsky received two checks totalling almost $10,000 — which was a surprise, since she hadn’t requested any state or federal aid due to coronavirus-related financial worries. Thankfully, Ravinsky knew she didn’t qualify and didn’t cash the checks. After all, she hadn’t worked in nearly three decades. She called the Pennsylvania Department of Labor and Industry to report potential fraud.

And she returned the checks. The department noted that the case was closed and to expect no further troubles. Ravinsky also asked an attorney how to proceed. She thought the entire process went smoothly, even if it was somewhat of an inconvenience.

But that wasn’t the end of her problems. She and 50,000 others reported unemployment or social security benefit fraud to the IRS. None of these people were made aware that Pennsylvania state authorities would still report the returned fraudulent checks as income to the Internal Revenue Service.

Ravinsky said of the ordeal, “I am very, very, very angry right now because I did not ask for any of this. The state had a responsibility to verify. Now, I am left holding the bag.”

And it gets even worse, because some people did apply for benefits — but couldn’t access the funds due to glitches in Pennsylvania websites. Just like those who reported tax fraud, these people still owe taxes on that money. And they have no way of paying.

Attorney Sharon Dietrich with Community Legal Services in Philadelphia said, “It is sort of like the cherry on top of the whole [Pandemic Unemployment Assistance] crisis. You don’t get the money plus you get screwed with the IRS.”

Many of the victims of these combined glitches and fraud are retired senior citizens, Ravinsky included. Nancy Sweetland is an 82-year-old who filed for financial assistance in April last year. The debit card she received from Pennsylvania State was requisitioned through United States Bank, but arrived defective due to one of the aforementioned glitches. She could not move money around using the card, nor could she use it to make purchases.

Phone lines over at the Labor and Industry department were constantly flooded with calls, and Sweetland failed to get through to anymore. Her messages were unanswered. According to the tax formed she received in the mail earlier this year, the account for the debit card was subject to $18,000 worth of benefits — and she would be taxed on all of them. 

Sweetland said, “Any email address that I ran across I sent [an email] to and I never got a response. I am just kind of at my wits’ end.”

Other state residents have received tax statements that show payments in excess of what they actually received. 

Audit investigation supervisor Susan Mease emailed a reply to Sandy Kolenda after Kolenda noted one such problem: “So you did receive [the checks], not sure if you have them and just never cashed them.”

Kolenda said, “I was crying. What do you do? I am one person up against the Department of Labor and Industry. It is incredibly frustrating and scary.”