More than 500,000 victims of tax-related identity theft are waiting for relief from the Internal Revenue Service, with case resolution now taking nearly 20 months, according to a report to Congress released Wednesday by the National Taxpayer Advocate.
Tax-related identity theft occurs when fraudsters use a taxpayer’s stolen Social Security number to file a fraudulent tax return and claim an illegitimate refund.
Erin Collins, the National Taxpayer Advocate and head of the Taxpayer Advocate Service, said the prolonged delays are causing severe financial stress for affected taxpayers.
“For many low- and middle-income taxpayers, waiting nearly two years for a refund is not merely an inconvenience,” Collins wrote in the report. “It can mean falling behind on rent, utilities, transportation costs, and other basic living expenses.”
The report said victims often face frozen refunds, prolonged uncertainty and limited communication from the IRS while cases remain unresolved.
Backlog Keeps Growing
The backlog has worsened despite years of warnings. Collins first flagged severe delays in 2023, when the IRS had roughly 484,000 open identity theft cases and average resolution times of about 19 months.
Instead of improving, both the backlog and wait times have increased.
The issue comes as identity theft complaints continue rising nationwide. The Federal Bureau of Investigation reported a 26% year-over-year increase in consumer complaints tied to criminals stealing taxpayer identities to file false tax returns and fraudulently claim refunds.
The IRS did not immediately respond to a request for comment.
Staffing Cuts Add Pressure
The delays come even as the IRS reported a largely successful 2026 filing season for most taxpayers.
Collins said the agency “performed better than expected in most respects” despite navigating sweeping tax law changes, significant workforce reductions and leadership turnover.
According to the Taxpayer Advocate report, the agency processed nearly 139 million individual tax returns and issued more than 90 million refunds, with about 98% of returns filed electronically and most refunds delivered without major delays.
But taxpayers needing manual assistance often struggled to get help. The report said the IRS received 48.1 million calls during filing season, with assistors answering only 21% of them. On the Taxpayer Protection Program line, used by taxpayers dealing with suspected identity theft, only 19% of calls were answered.
The service challenges came amid significant workforce reductions and leadership turnover, which Collins cited as major operational pressures on the agency.
Modernization Pressure Builds
The report comes days after an IRS advisory panel recommended broader use of artificial intelligence for fraud detection, identity verification and workflow automation, warning that the agency’s aging technology systems continue to slow processing and create inefficiencies.
The Electronic Tax Administration Advisory Committee said stronger fraud prevention tools could help the IRS identify suspicious filings earlier and reduce refund fraud tied to identity theft schemes.
The IRS has already been expanding digital services as part of its broader modernization push. Earlier this year, the agency widened access to its Business Tax Account platform and urged taxpayers to use tools such as Identity Protection PINs to guard against tax-related identity theft and fraud.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.
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