The Internal Revenue Service (IRS) is facing a significant challenge with identity theft cases, causing a backlog of 500,000 unresolved fraud cases. Taxpayers are left waiting for refunds and credits that they are rightfully owed, according to a report by the National Taxpayer Advocate.
The slow pace of addressing identity theft cases has been described as a “blemish” on the performance of the IRS, especially as the agency is undergoing a modernization campaign to enhance taxpayer services. Despite previous criticisms for delays in handling identity theft cases, the backlog has only worsened over time.
It currently takes the IRS nearly two years to resolve identity theft victims’ assistance cases, with an inventory of approximately 500,000 cases. The taxpayer advocate, Erin Collins, expressed her frustration with the delays, calling them “unconscionable” and emphasizing the importance of prioritizing assistance for victims. She highlighted that these delays violate the right to quality service outlined in the Taxpayer Bill of Rights.
The growing backlog of identity theft cases is likely to fuel criticism from congressional Republicans towards the IRS, potentially leading to calls for budget cuts from the agency’s $80 billion funding. Critics argue that the IRS is not effectively utilizing its resources and failing to address key issues like identity theft.
Identity theft has been a longstanding issue for the IRS, with criminals stealing taxpayers’ information to fraudulently claim refunds. Victims often only realize they are victims when they attempt to claim their refunds, triggering a complex process involving identity theft affidavits and paper tax returns. This process is necessary for the IRS to investigate and resolve the fraudulent claims.
As the IRS grapples with the increasing number of identity theft cases, taxpayers are advised to remain vigilant about protecting their personal information to prevent falling victim to fraud. Additionally, the agency must streamline its processes and allocate resources effectively to address the backlog and provide timely assistance to affected taxpayers.