A backlog at the IRS of identity theft cases is growing, hitting 500,000 in April, which is leading to some taxpayers not receiving refunds and others not seeing their cases resolved for years, according to a new report from National Taxpayer Advocate Erin Collins.
The Taxpayer Advocate Service, led by Ms. Collins, is an independent organization within the IRS that issues two annual reports to Congress, reporting findings and making recommendations on how to fix them.
The average resolution time for the cases was more than 22 months.
When IRS workers learn that an identity thief filed a fake return using a taxpayer’s sensitive information, the taxpayer must submit a form called an identity theft affidavit and a paper return. The IRS freezes the taxpayer’s actual return while it investigates identity theft victim assistance (IDTVA) cases. As of 2023, the cases were taking about 19 months to resolve, and the backlog was roughly 484,000 cases.
The delays and backlog have grown worse since then, in part because more identity theft cases are coming in, according to Ms. Collins. The taxpayer advocate also found that the IRS has been removing workers from the cases to work on other assignments, including answering phone calls during filing season.
“This problem started during the COVID-19 pandemic. However, the onset of the pandemic was over four years ago. It is no longer reasonable to associate the pandemic challenges with high IDTVA case resolution times,” she said. “These taxpayers are already victims of a bad actor who stole their identity and used it to file a fraudulent return. The IRS is revictimizing taxpayers.”
The IRS has taken steps to remedy the problems, including increasing the number of employees that work on the cases, according to Ms. Collins.
An IRS spokesperson didn’t respond to a request for comment.
Ms. Collins also found that IRS employees only answered 31 percent of the nearly 40 million calls it received from taxpayers in 2024. While the agency’s handling of calls has improved over prior years, the agency still has to do better to answer calls and prioritize people with pressing issues such as those facing eviction because of IRS levies, she said.
One area that could be improved is tasking staffers who handle certain phone lines with completing other work when the phones aren’t ringing. Those employees spent 1.1 million hours, or about a third of their time, “sitting around waiting for the phone to ring,” the report states.
Sen. Todd Young (R-Ind.), a member of the Senate Finance Committee, said in a statement that his office “continues to hear from Hoosiers who are having trouble obtaining assistance or even getting their phone calls answered.” He said that the IRS “must do better.”
Ms. Collins recommended that the IRS fix issues with its e-filing system, work to improve hiring and training, and better explain to taxpayers the information they need “in an accessible, clear, and sufficiently detailed way.”
She also expressed optimism about the future of the IRS as she commented on its work since the COVID-19 pandemic started.
“I also want to acknowledge, recognize, and thank other IRS employees, managers, and leaders for administering the last four filing seasons, wherein taxpayers received hundreds of millions of much-needed refunds, stimulus payments, and other congressionally authorized tax benefits,” Ms. Collins wrote.
“Did the IRS do a perfect job? No. But I believe the IRS has turned the corner, and with the additional multiyear funding provided by the Inflation Reduction Act, particularly for taxpayer services and information technology (IT) modernization, I am bullish that the taxpayer experience will continue to improve and move onward and upward.”
