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1099 Incident Update as of 02/07/21

February 8, 2021

The incident involving the improper processing of nearly 55,000 1099-G tax documents from the Vermont Department of Labor has highlighted the complexities associated with various COVID-19 related unemployment insurance programs. During 2020, the Department administered 6 different benefit programs, from 5 different systems, with 2 different print shops and involving 3 separate state agencies, as well as the expansive nature of those who had their employment impacted in 2020 by COVID-19. Prior to the pandemic, the Department processed less than 17,000 1099-G documents annually out of a single system, but this year the Department had the task of processing nearly 180,000 tax documents.

This in no way justifies or exonerates the Department from the issue at hand nor the responsibility we have to make sure every action is taken to correct this failure and protect Vermonters. Every person impacted by this incident deserves the full attention of the Department, and my commitment remains, to use all means necessary to ensure our processes are of the highest quality and that the information we are entrusted with is safe and secure.

Below is a status update as of this weekend on the various efforts that are underway at the Department.

1099-G Incident Update:

o    Action Team 1 – Faulty 1099-G Recall/Recapture
This team spent last week working to parse out the various populations that were impacted by the processing error while working on the plan for sending 75,000 recall notices and envelopes to individuals who received the faulty 1099. Printing of this notice began this weekend by the Buildings and General Services (BGS) Print Shop and will continue into the early part of the upcoming week. Notices will be mailed end of this week, which includes a prepaid, self-addressed envelope and instructions on how to return the 1099-G document to the Department.

o    Action Team 2 – Identity Protection
This team spent the past week working to identify the exact population who had their identities exposed. It’s important for us to know who exactly was exposed and to what degree so we can provide that information directly to Vermonters impacted by this incident. Additionally, the ID protection team worked on finding a vendor to offer ID protection services. This included coordination with the State’s purchasing office, the Agency of Administration, and the Attorney General’s Office. We have identified a vendor and are working to finalize a contract for services. More information on how claimants can enroll in ID protection services will be announced by the end of the week.

o    Action Team 3 – Resend New 1099-Gs
This team is working to revalidate ALL 1099-Gs, regardless of program, to ensure the new 1099-Gs are accurate before they are remailed. We have already implemented corrective actions, including additional validation checkpoints in our process, and brought on members of the Agency of Transportation (AOT) Audit Team to provide additional quality assurance and quality control expertise.

Finally, I would like to extend my personal apology to those impacted by this error. Regardless of how or where the error occurred, the final documents that were sent had the Department of Labor's logo at the top, and therefore our responsibility. Additionally, it is not lost on me that trust is something that is earned, and that we have a lot of work to do to earn back the public's trust. Moving forward, we will continue to do whatever is necessary to correct this issue and protect impacted claimants.

Michael Harrington