Many businesses who received Ohio Bureau of Worker Compensation rebate or dividend checks during 2020 recently received a letter from the Ohio Bureau of Workers Compensation requesting that they provide the BWC a completed Form W-9 to provide the information needed to complete the IRS tax statement Form 1099-G, which reports taxable Government Payments. This action also indicates that these rebate payments could potentially be subject to both Ohio state income tax and Commercial Activity Tax.

Those who received rebate checks from the BWC will receive an IRS Form 1099-G. The total income received will be reported in box 6, taxable grants.

In prior years, BWC was not compelled to issue this form for past rebates and dividends. However, in order to comply with IRS regulations, they had no choice but to issue the 2020 Form 1099-G.

BWC stated the amount reported on the 1099-G will be for the aggregate amount of all three BWC payments received in the calendar year 2020. These forms will be mailed to employers in March 2021 at the latest, as BWC will make every effort to issue them as soon as it is possible to do so.

However, as BWC is still collecting Form W-9s, businesses who need this 1099-G information by the normal end of January deadline should add up all the payments they received from BWC in 2020.

Besides federal taxes, the rebates/dividends will be subject to Ohio taxes. The Ohio Department of Taxation stated these BWC payments will be subject to Commercial Activity Tax (CAT) liability because they are considered taxable gross receipts, since no statutory exclusion applies in R.C. 5751.01(F)(2) to the amounts received.

In addition to businesses receiving 1099-G Forms from BWC, the Ohio Department of Job and Family Services will also be issuing 1099-G Forms to those individuals who filed for unemployment. ODJFS warns that any taxpayer who receives a 1099-G from them but did not file for unemployment benefits could potentially be the victim of identity theft.

Anyone suspecting they may have been the subject of identity theft pertaining to unemployment benefits should visit unemployment.ohio.gov, click on the “Report Identity Theft” button, and complete the reporting form. ODJFS will issue confirmation emails to everyone who files a report with information about identity theft and protection. The agency will process the reports, conduct investigations and, if necessary, issue corrections to the IRS.