The Internal Revenue Service (IRS) is facing a significant challenge with a pileup of tax identity theft cases, with roughly 500,000 unresolved cases reported as of April. This number has increased from 484,000 cases in September, indicating a growing backlog of unresolved cases. Identity theft victims have been waiting for more than 22 months for resolution, in addition to several weeks for refunds. These delays have caused significant hardship for taxpayers, particularly lower-income individuals, with nearly 70% of cases involving taxpayers with an adjusted gross income at or below 250% of the federal poverty level.
The delays in resolving identity theft cases have been exacerbated by various factors, including Covid-19 shutdowns and pandemic relief efforts. The prolonged timeline for resolving these cases has been a source of frustration for taxpayers, with National Taxpayer Advocate Erin Collins describing the delays as “unconscionable.” The challenges faced by the IRS in addressing these cases have been ongoing, despite efforts to improve taxpayer service through the 2024 season.
The IRS has acknowledged the need for improvements in processing identity theft cases and has outlined a range of measures to address the backlog. The agency plans to allocate more resources to work on these cases and review its processes to better identify and prevent evolving tax-related identity theft threats. While acknowledging the complexity of these cases, the IRS believes that increased funding has better positioned the agency to resolve identity theft cases more efficiently.
Warning to Tax Professionals
In light of the ongoing threat posed by identity theft criminals, the IRS has issued a warning to tax professionals to protect themselves and their clients from potential scams. Tax professionals are advised to be vigilant and take measures to safeguard their information from identity theft criminals who may be targeting them. By being proactive and implementing security measures, tax professionals can help mitigate the risk of falling victim to identity theft fraud.
The IRS continues to face challenges in addressing the backlog of tax identity theft cases, with delays in resolution causing hardship for affected taxpayers. While efforts are being made to improve processing times and prevent future identity theft threats, the agency emphasizes the complexity of these cases and the need for continued vigilance in combating fraud. By working together with stakeholders and implementing strategies to enhance security, the IRS aims to provide faster service to identity theft victims and bolster taxpayer protection in the face of evolving threats.