IRS Identity Theft Case Resolution Delays Average Nearly 20 Months
A recent report from the Treasury Inspector General for Tax Administration reveals that taxpayers dealing with tax-related identity theft face severe processing delays, waiting an average of nearly 20 months for the IRS to resolve their cases. Although the agency sets an internal target of 120 calendar days to resolve identity theft claims, a massive backlog of unassigned cases has pushed resolution times far beyond that goal.
The findings directly affect individual taxpayers, business owners, and real estate investors whose personal details or taxpayer identification numbers are compromised to file fraudulent tax returns. In a detailed review of cases closed during fiscal year 2023, the watchdog report determined that files spent an average of 533 days sitting in an unassigned inventory before an IRS assistor began working on them. Total processing times averaged 655 days for that sample group, with only four of the reviewed cases completed within the official 120-day goal.
These administrative delays carry significant financial consequences for both the federal government and taxpayers awaiting delayed refunds. The watchdog estimated that the IRS paid approximately 124.2 million dollars in statutory interest on delayed refunds tied to identity theft cases between fiscal years 2023 and 2025. Annual interest payouts rose from 17.1 million dollars in fiscal year 2023 to 61.6 million dollars in fiscal year 2025. Taxpayers also experienced significant communication gaps, as TIGTA estimated that over 50,000 taxpayers did not receive required correspondence in fiscal year 2023, and the IRS often does not notify taxpayers when internal filters catch potential identity theft.
IRS management has acknowledged the backlog and taken steps to increase trained staffing, streamline certain case categories, and explore artificial intelligence tools to evaluate case complexity. Despite these measures, nearly 316,000 identity theft cases remained unresolved as of late September 2025. While the agency agreed with watchdog recommendations to improve assignment workflows and send initial acknowledgment letters, it rejected a recommendation to implement formal verification checks ensuring correspondence reaches taxpayers.
For taxpayers and property owners, the practical implication is that resolving a tax identity theft incident requires long-term patience and financial contingency planning. Victims cannot rely on prompt refund disbursements or routine status updates while a case is pending. To mitigate risks, taxpayers should consider proactive security steps, such as obtaining an IRS Identity Protection PIN and filing returns as early as possible to block unauthorized filings.
Source: Journal of Accountancy
