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Thanks for the response. We have submitted all of the necessary paperwork and requested a corrected 1099 back in January. We have since contacted the Michigan Unemployment agency and all they can do is confirm that it's being investigated. There's no way to get in touch with the actual fraud dept. We have been told that we just have to wait for the investigation to be completed.

I have been told by an accountant that I should enter the 1099G into my taxes and then enter an identical 1099, but this time putting a negative amount in so that they cancel each other out and shows $0 received. Does that make sense to you?