IRS delays causing financial harm to taxpayers, watchdog reports
- An independent watchdog within the IRS has raised concerns about unconscionable delays in resolving identity theft cases.
- The delays could lead to financial harm for some taxpayers, despite improvements in taxpayer services.
- The IRS is urged to address the slow resolution of identity theft cases to prevent further financial damage.
In a recent report by the National Taxpayer Advocate, an independent watchdog associated with the IRS, it was revealed that the IRS is facing significant delays in resolving identity theft cases, with taxpayers waiting nearly two years for resolution. The report highlighted that the IRS took more than 22 months to resolve identity theft victims' cases in April 2024, up from 19 months earlier in the year. These cases involve fraudsters using taxpayers' Social Security numbers to file false tax returns, leading to delays in legitimate taxpayers receiving their refunds. Despite receiving substantial funding from the Inflation Reduction Act signed into law by President Joe Biden in August 2022, the IRS continues to struggle with addressing identity theft issues. The delays in resolving these cases are particularly challenging for low-income taxpayers who rely on tax refunds for essential living expenses. The report emphasized the financial insecurity faced by identity theft victims, as delayed refunds can impact their ability to cover day-to-day expenses and medical bills. While the 2024 tax season saw overall improvements in IRS services, the report underscored the ongoing backlog of identity theft cases as a significant service gap. The IRS acknowledged the issue and stated its commitment to enhancing resources and collaborating with stakeholders to address evolving identity theft threats. Despite the progress made in recent years, concerns remain about potential cutbacks to the IRS's funding and the need for continued improvements in taxpayer services and technology modernization. Erin M. Collins, who heads the organization dedicated to safeguarding taxpayers' rights, expressed optimism about the IRS's future trajectory but stressed the importance of addressing the delays in resolving identity theft cases. The report highlighted the need for sustained efforts to improve the taxpayer experience and prevent further harm to identity theft victims, who face not only financial challenges but also difficulties in accessing loans and financial services.