500,000+ Identity Theft Cases: IRS Struggles to Resolve Delays, Experts Warn of Economic Impact – What to Know!

IRS Identity Theft Delays Reach Crisis Point

IRS Identity Theft Backlog – A Recipe for Financial Disaster for Low-Income Families

According to the posted article in CBS News, the National Taxpayer Advocate (NTA) is an organization that oversees the IRS and claims that the agency is significantly delaying the resolution of identity theft cases. These cases now have a nearly two-year wait time which is up from 19 months earlier in the year. The IRS had over 500,000 open identity theft cases as of April 2024. This occurs when tax return filing and refund claims are made by fraudsters using another person’s Social Security number. The IRS freezes the second return to figure out who is the legitimate filer when the real taxpayer files their return. Despite receiving billions of dollars from the Inflation Reduction Act signed by President Joe Biden in August 2022 the IRS is still slow. Erin M. Collins who is the head of the NTA has criticized these delays and saying they are particularly harmful to low-income taxpayers who rely on their tax refunds for living expenses. These delays can also cause problems in securing loans like mortgages.

The IRS acknowledged the issue in an email to CBS MoneyWatch stating they are working to improve the situation by adding more resources and training to handle these cases faster. The agency has tripled its closure rate of identity theft cases since 2020 and hopes increased funding will further improve its efficiency. The 2024 tax filing season went better than past years especially compared to the poor service during the pandemic, according to the NTA. Collins expressed optimism about the future noting improvements in IRS performance in areas like technology and customer service. However, the IRS‘s funding is at risk.

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500,000+ Identity Theft Cases: IRS Struggles to Resolve Delays, Experts Warn of Economic Impact – What to Know! (PHOTO: Yahoo)

Funding Woes Hamper IRS Efforts to Combat Identity Theft

Furthermore, last year’s budget deal between Republicans and the White House cut $1.4 billion from the agency with plans to take $20 billion more over the next two years to fund other programs. Funding for the IRS has been a contentious issue since 2013 when the agency was found to have closely scrutinized political groups seeking tax-exempt status. Collins believes the IRS is improving which is thanks to the multiyear funding from the Inflation Reduction Act despite these challenges. She is hopeful that the taxpayer experience will continue to get better.

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