Lengthy Issue Resolution Delays and Inadequate Notices Burden Taxpayers Who
Are Victims of Identity Theft or Whose Returns the IRS Has Flagged for Possible
Identity Theft
In FY 2019, the IRS received 92,631 IDTVA receipts, and in FY 2021, that number jumped to 328,591. This increase in AM case receipts drove up cycle times from 117 days in FY 2019 to 279 days in FY 2021
and to 556 days, nearly 19 months, in FY 2023, its highest point to date.
Taxpayers Receive Only One Letter Asking Them to Authenticate Their Identity When the
IRS Suspects an Identity Thief May Have Filed a Return, But Taxpayer Response Rates to
These Letters Are Low
When the IRS is questioning whether a return is legitimate, it will send taxpayers one letter asking them
to authenticate their identity, and it will not process their return and issue their refund until the taxpayer
responds to the letter and completes the authentication process. Because the IRS is holding taxpayers’
refunds, it would be reasonable to assume taxpayers would quickly respond to these letters. However, about
half of the authentication letters sent out in CY 2022 resulted in no response. In 2022, the IRS suspended
processing of 4.8 million tax returns and requested taxpayers authenticate their identities before releasing their
refunds.
Identity Protection Personal Identification Numbers Are an Underutilized Identity Theft
Protection Tool
The IP PIN is a valuable and underutilized identity theft protection tool for taxpayers. Anyone concerned
about tax-related identity theft can request an IP PIN; however, only about 525,000 taxpayers opted into the
IP PIN program in CY 2022. The FTC received over 1.1 million reports of identity theft in 2022. Thus,
there were more than double the number of individuals affected by identity theft than those who requested
IP PINs.
Tax-related identity theft is a continuous problem that plagues taxpayers and the IRS, and its prevalence has
increased in recent years due to pandemic-related circumstances that enticed many bad actors. For those
individuals or businesses that have been victims of identity theft it is a difficult, unpleasant, and emotional
experience. Victims of identity theft may feel overwhelmed, helpless, angry, isolated, betrayed, and even
embarrassed.