The Internal Revenue Service made giant strides in taxpayer services in 2025, according to the most recent report by the National Taxpayer Advocate, an independent watchdog, but continues to face cases of unacceptable delay in the resolution of identity theft. For the first time since 2020, National Taxpayer Advocate Erin Collins could present some good news about taxpayer experience, claiming that “the IRS has made major strides” aided by the billions in funding allocated under the Inflation Reduction Act.
The IRS managed to enjoy a third consecutive successful filing season in 2025, timely processing in excess of 98 percent of individual returns, achieving an 87 percent service level on just a three-minute average phone hold for taxpayer assistance. This was a complete turnaround from the pandemic when hold times endured by taxpayers amounted to several hours, with processing being drawn out.
Persistence in Identity Theft processing crisis
The IRS is still in a crisis on identity theft victim processing, with hundreds of thousands of such cases troubling the service each year. The agency boasted of having approximately 387,000 Identity Theft Victim Assistance (IDTVA) cases at its inventory at the end of the 2025 filing season, taking about 20 months on average for the resolution of such complaints. Thus, amid the troubling findings, the resolution time had increased by one month from 19 in 2023 to 22 months in 2024.
The delay is more harmful to the more vulnerable population, as 69 percent of affected taxpayers below have adjusted gross incomes at or below 250 percent of the Federal Poverty Level. These are the same persons who require tax refunds for their day-to-day living expenses, such as rent, food, and medical bills, thereby rendering the nearly two-year delay extra punishing for them.
Two categories of identity theft delays
The IRS has two primary lines of business in handling identity theft, both of which are horrendously slow. The first one involves roughly 2.1 million returns that IRS fraud detection filters flag as possible identity theft. An exact series of letters get sent to taxpayers, requiring them to authenticate their identity before refunds are issued, a process that generally takes several months before concluding.
The second category involves true victims whose identity is stolen with fraudulent perpetrators filing impostor returns in their names against their respective Social Security numbers. These cases are forwarded to a specialized unit, IDTVA, and currently take an average of 602 days to resolve. This situation worsened starting fiscal year 2021 when the IRS received against fraudulent perpetrators a three-fold increase in identity theft claims involving pandemic-related tax benefits.
Early filers still face frustrating delays
Processing delay allows many taxpayers who filed returns early in 2025 to wait well over two months for their refunds. “I filed early, but my refund still has not arrived” is a very popular expression from taxpayers caught in the identity theft verification process. Even taxpayers who filed electronically and requested direct deposit- usually the fastest refund option taking about 21 days- will find themselves looking months in delay for the IRS to act because of checks involving identity verification.
And certainly, this situation can be particularly frustrating for those taxpayers since it often relates to the delays of valid claims made by legitimate taxpayers who have done nothing wrong. Oftentimes, however, they become the source of a new tax problem to which they want to be subjected, e.g., erroneous balance due notices in the succeeding years if the accounts are not timely adjusted, thus proliferating the nuisance for these taxpayers.
Systematic issues need conscious attention
Collins has repeated her admonitions for IRS leadership to urgently bring down the IDTVA case resolution timeline to four months, calling the delay today’s “unconscionable” situation while adding that it was one of the “mockeries to taxpayer rights”. The much-publicized IRS assertions, over the years, on IDTVA as a primary area of concentration for cycle time reduction have, unfortunately, seen a worsening in the state of affairs.
The inconsistent communication practices serve to complicate the matter. The IRS does not consistently send acknowledgement letters to all identity theft victims when it receives their cases, therefore leaving many taxpayers in the dark as to the status of their claims. As of November 2024, the IRS was still processing identity theft affidavit forms it received in August 2023, highlighting the existing mammoth backlog.
Recommendations to improve
Drawn from this recent report are numerous recommendations made by the National Taxpayer Advocate, including substantially increasing the staffing for identity theft cases, implementing better technologies to facilitate faster fraud detection, and fast-tracking cases where refunds are currently due to victims. The report further calls for the IRS to provide regular status updates to victims about their cases and to keep proper documentation throughout the process.
Indeed, the IRS has made admirable strides in various dimensions of taxpayer service, but processing delays and lock-ups in the identity theft field remain as its “largest current service gaps,” in the words of IRS Commissioner Daniel Werfel. In the absence of appropriate resource allocations along the line of resolving systemic issues, hundreds of thousands of taxpayers will continue to remain under the watch of the IRS for close to two years to be able to receive their lawful refund.
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