A growing crisis for identity theft victims
Imagine filing your taxes, expecting your refund—and instead, you find out someone else has already filed using your identity. Worse, the IRS tells you it might take over a year and a half to fix. That’s the current reality for hundreds of thousands of Americans, and the problem is only getting worse.
According to a new report from the National Taxpayer Advocate, victims of tax identity theft are waiting an average of 19 months to have their returns processed and receive their refunds. This staggering delay has triggered frustration, financial hardship, and a wave of criticism about how the IRS handles identity theft cases.
What exactly is Tax identity theft?
Let’s break it down simply. Tax identity theft happens when someone uses your personal information—like your Social Security number—to file a tax return and claim your refund before you even get the chance. This form of fraud is especially tricky because you usually don’t know it happened until your real return gets rejected.
That’s when the nightmare begins.
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Victims left in limbo for over a year
In fiscal year 2023, the IRS received nearly 300,000 new identity theft cases. Compare that to just 92,000 cases in 2019—that’s more than triple the number in just a few years.
Here’s the real kicker: the average resolution time has now hit 556 days—that’s over 18 months, far longer than the IRS’s own goal of 120 days.
In her annual report to Congress, National Taxpayer Advocate Erin Collins called the situation “unconscionable.” She said that these delays are not just frustrating—they are deeply unfair to honest taxpayers who rely on their tax refunds, especially lower-income Americans.
Could you please explain the reason for the delay?
You might be wondering—what’s causing these delays?
A big part of the problem is resource shifting. In 2023, the IRS reassigned 572 employees from other departments to help with telephone service, an area where the agency has long struggled. While that did help improve phone response times, it meant fewer staff were left to handle identity theft cases.
And as those cases continue to skyrocket, the IRS’s Identity Theft Victim Assistance program simply hasn’t kept up.
The human cost of long delays
This issue isn’t just a numbers game—it’s deeply personal. For many Americans, their tax refund is the largest check they receive all year. Delays in processing that refund can mean missing rent, falling behind on bills, or going without essentials.
According to IRS data, 69% of identity theft victims had incomes at or below 250% of the federal poverty level. Many of these victims were claiming the Earned Income Tax Credit, a lifeline for working families.
In short: the people who need their refunds the most are suffering the longest.
What’s being done to fix it?
The IRS says it’s aware of the problem—and working on it. IRS Commissioner Danny Werfel acknowledged that many of the Taxpayer Advocate’s concerns are valid and that solving them is a priority under the agency’s new strategic operating plan, which is being funded in part by the Inflation Reduction Act.
But Werfel also made it clear: Without adequate funding, the IRS won’t be able to fix these issues. And that’s where the problem gets political.
Are there plans to reduce IRS funding?
Right now, Congress is in the middle of negotiating government spending bills, including how much money the IRS will receive. Some lawmakers have proposed cutting IRS funding—a move critics say will only make things worse.
Commissioner Werfel warned that unless the IRS is given the tools to modernise and staff up, delays will only grow, and identity theft victims will continue to suffer.
In his words, “This is another reason why IRS funding is so critical to making transformational changes to help taxpayers and the nation.”
A surge in identity theft is expected
Unfortunately, things may get worse before they get better.
James Lee, the COO of the Identity Theft Resource Center, says that 2023 saw a record number of data breaches, meaning more stolen personal information is circulating on the black market than ever before.
That makes it highly likely that 2024 and 2025 will see even more attempts to commit tax identity theft. So if you haven’t been affected yet, there’s still a risk.
How can you protect yourself?
Here are some simple steps you can take to reduce your risk:
- File early: Fraudsters can’t beat you to it if your return is already in.
- Use strong passwords and two-factor authentication for financial accounts.
- Be cautious with personal data: Don’t share your Social Security number unless absolutely necessary.
- Check your IRS records: You can create an IRS.gov account to monitor your tax activity.
- Get an IP PIN: This is a six-digit number that prevents someone else from filing a return using your SSN.
If you’re a victim of tax identity theft:
- Call the IRS Identity Protection Specialised Unit at 800-908-4490.
- Visit IdentityTheft.gov to report the issue and get step-by-step help.
- Contact the National Taxpayer Advocate Service if you’re experiencing delays beyond 120 days.
Stay alert, file smart, and protect your information—because tax season shouldn’t come with a side of identity crisis.
