Taxpayers Face 'Unconscionable' IRS Delays Dealing With Identity Theft, New Report Claims

Identity theft may be devastating, affecting everything from your credit to your financial fitness. But the National Taxpayer Advocate's midyear report to Congress reveals that taxpayers who are victims of tax-related identity theft face unusually long wait times to resolve the issue. In fact, the report calls the Internal Revenue Service (IRS) delays "unconscionable."

The report highlights an important issue that affects many Americans, and it draws attention to the need for change to correct this problem.

What's happening to Americans affected by tax-related identity theft

Some thieves may steal an individual's Social Security number and use it to file a tax return, claiming a fraudulent tax refund. Such a situation is called tax-related identity theft.

According to the report, more than 500,000 victims of tax-related identity theft are still waiting for the issue to be resolved by the IRS. At present, the IRS takes about 20 months, or approximately two years, to resolve these issues.

How these delays affect Americans

Victims of tax-related identity theft may experience numerous hardships as a result of the theft. Their tax refunds may be temporarily withheld. For some individuals, a withheld tax refund is an inconvenience, but for low-income households, it might mean the difference between being able to cover bills and rent or not. A financial issue like a delayed refund could have a cascading effect for financially vulnerable families.

Additionally, dealing with a tax-related identity theft case is a frustrating and time-consuming process. When that process is drawn out for up to two years, it may take an emotional toll on the victims.

Why these delays may be occurring

These delays are occurring during a time when the IRS' capacity is already strained. Congress passed a fiscal year 2026 appropriations package cutting $1.1 billion from the IRS budget, bringing the 2026 base IRS budget 40% lower than its 2010 level after adjusting for inflation.

Additionally, in the past year, the IRS has undergone a 27% staffing cut. In 2025, the IRS had about 102,000 employees, but it finished the year with approximately 74,000 employees due to firings and layoffs. The Department of Government Efficiency prompted those firings and layoffs, and many customer service workers have left the IRS this year.

Because of these cuts, the agency's capacity has been significantly reduced, leaving less staff available to answer questions or focus on resolving tax-related identity theft cases.

Warnings of delays

Erin Collins, who oversees the Taxpayer Advocate Service, wrote about the delays that occurred with taxpayer identity theft cases back in 2023. In 2023, the IRS had a backlog of approximately 484,000 identity theft cases. Resolving those cases took the IRS an average of 19 months, meaning victims had to wait about a year and a half to receive the refunds they were owed.

What Collins recommends

Collins highlights the fact that the IRS is changing how it handles identity theft cases in an effort to improve processing times, but she notes that the new approach also raises concerns. She recommends that as the IRS transitions identity theft cases out of the Identity Theft Victim Assistance unit, the organization ensures that customer service representatives receive appropriate training and have the tools they need to effectively manage those cases.

Collins also suggests that the IRS establish clear procedures and service standards to ensure taxpayers are treated fairly, and that the organization improve transparency to keep taxpayers better informed.

The phone service gap

Potentially exacerbating the identity fraud issue is the fact that the IRS only answered a fraction of the calls received on the Taxpayer Protection Program line. According to the National Taxpayer Advocate's 2026 mid-year report, it was more difficult for taxpayers to reach the IRS by phone during the 2026 filing season than it was in 2025. The IRS received 48.1 million calls, but answered just 9.9 million calls, or 21%. Taxpayers present an average of 14 minutes waiting on calls.

Even more notably, the Taxpayer Protection program line received about 2.4 million calls; taxpayers call the line when their returns are suspended because of suspected identity theft. Taxpayers may use the line to authenticate their identities so their funds may be released. The IRS answered just 19% of those calls, with taxpayers waiting on hold for an average of 20 minutes.

Bottom line

If you suspect you're a victim of tax-related identity theft, it's important to work quickly. You may file a Form 14039 online or complete the paper Form 14039 and mail it to the IRS to alert the IRS to the potential fraud. You may also request an Identity Protection PIN to help protect yourself from becoming a victim of fraud. If the IRS identifies a suspicious tax return using your Social Security number, the organization should send you a letter and won't process the return until hearing back from you.

Knowing how to navigate tax-related identity fraud may help you prepare, just in case, and it may help you lower your financial stress if you ever find yourself in such a situation.

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