IRS Watchdog: Latest Report Confirms Persistent Delays By the IRS in Resolving Identity Theft Cases Despite Service Improvements

An independent IRS watchdog has noted significant advancements in taxpayer services. However, the agency continues to face difficulties in promptly resolving identity theft cases. The latest National Taxpayer Advocate report to Congress highlights that these delays remain a significant problem.

The 2024 tax filing season was improved due to a funding boost from the Inflation Reduction Act, signed into law by President Joe Biden in August 2022. However, there are still prolonged delays in resolving identity theft cases.

The report shows that the time to resolve identity theft cases has increased from nearly 19 months in January to over 22 months as of April, with around 500,000 unresolved cases. These delays cause significant challenges for victims who rely on receiving timely refunds.

In response, the IRS is reallocating resources to address the backlog, focusing on training additional staff and collaborating with stakeholders to prevent new identity theft threats. However, the IRS faces potential funding challenges. Recent political developments have resulted in budget cuts, threatening the agency’s ability to address service gaps and maintain improvements.

The IRS’s struggle to get additional funding is further complicated by its history of scrutinizing political groups applying for tax-exempt status. This adds to the political sensitivity surrounding the IRS’s ability to secure additional funding which leads to operational challenges.

Despite advancements in modernizing technologies, improving phone response times, and expediting refunds, the slow resolution of identity theft cases undermines trust in the IRS’s ability to protect and assist fraud victims. The IRS is working diligently to improve its services by training additional staff and reallocating resources.

As the IRS navigates these challenges, taxpayers must stay alert to what can increase the odds of them becoming victim to an identity theft. By taking preventive measures, individuals can reduce their risk of falling victim and protect their financial well-being. Below are some preventive measures to consider.

• Secure Personal Information: Keep sensitive documents, such as Social Security cards, in a safe place and avoid carrying them unnecessarily.
• Monitor Financial Accounts: Regularly check bank and credit card statements for unauthorized transactions. Use online banking alerts to stay updated.
• Use Strong Passwords: Create complex passwords for online accounts and change them regularly. Avoid using easily guessable information like birthdays or names.
• Be Cautious with Personal Information: Do not share personal information over the phone, email, or text unless you are certain of the recipient’s identity.
• Shred Sensitive Documents: Shred bank statements, bills, and other documents containing personal information before disposing of them.
• Establish credit freezes with all three credit bureaus: Equifax, Experian and Transunion all offer free credit freezes. Most businesses will not open credit accounts without checking your credit report. Although a freeze will stop someone from opening a new account in your name, it won’t prevent identity thieves from taking over existing accounts.
• Review Credit Reports: Regularly obtain and review your credit reports from the major credit bureaus to ensure there are no unauthorized accounts or activities.

For additional information or questions, please reach out to your LMC professional.