Rampant id theft has overwhelmed the Internal Revenue Service, leading to a backlog of 500,000 unresolved fraud circumstances, leaving taxpayers with out refunds and credit that they’re due, the company’s watchdog wrote in a report back to Congress on Wednesday.
The report by the National Taxpayer Advocate described the sluggish tempo of addressing the id theft circumstances as a “blemish” on the efficiency of the I.R.S., which is within the midst of a sweeping modernization marketing campaign that goals to enhance taxpayer companies. While the I.R.S. was criticized by the watchdog for identify theft delays last year, the backlog has gotten solely worse.
The I.R.S. is taking almost two years to resolve id theft victims’ help circumstances and has a list of roughly 500,000 circumstances, up from 484,000 circumstances in September.
“I.R.S. delays in resolving id theft sufferer help circumstances are unconscionable,” Erin Collins, the taxpayer advocate, wrote within the report.
Calling on the company to prioritize help for victims, she added: “Delays of almost two years make a mockery of the precise to high quality service within the Taxpayer Bill of Rights.” The backlog of circumstances is probably going to offer congressional Republicans extra fodder to criticize the I.R.S. and to name for cleaving again extra of the $80 billion in funding that the company acquired by way of the Inflation Reduction Act of 2022. Critics of the company have been arguing that it’s bloated and failing to place that cash to good use.
Identity theft has lengthy been an issue for the I.R.S. Criminals typically steal taxpayers’ figuring out info and file paperwork to fraudulently declare their refund. Taxpayers understand this solely after they attempt to declare their refund, resulting in a laborious course of wherein they need to submit an id theft affidavit and a paper tax return earlier than the company will open a case to analyze the matter.
At that time, the victims of determine theft are left ready for months earlier than they will obtain the cash that they’re owed.
The National Taxpayer Advocate mentioned that the majority victims of id theft have been on the decrease finish of the earnings scale and infrequently wanted their refunds and refundable tax credit to pay their dwelling bills.
“The I.R.S. is revictimizing taxpayers by making them wait almost two years to resolve their case and obtain their refund,” the report mentioned.
The report mentioned that the issue was partially attributable to the company’s redirecting assets aimed toward bettering its metrics that display how effectively calls are being answered. However, the watchdog mentioned that the I.R.S. was utilizing an outdated methodology to trace how shortly it answered calls and that the majority callers had been disconnected or routed to automated operators.
Despite the criticism, the watchdog famous that the I.R.S. was dedicating extra workers to cope with id fraud circumstances and that the 2024 tax submitting season general went “easily.”
The I.R.S. was initially given $80 billion to improve its know-how and enforcement skills, however Congress clawed again roughly $20 billion of these funds final 12 months throughout a spending struggle between Republicans and Democrats.
A report revealed final week by the Treasury Inspector General for Tax Administration mentioned that the I.R.S. has to this point spent $5.7 billion, or 10 %, of its Inflation Reduction Act funding. About $2 billion of that cash, nevertheless, was spent on regular working bills that the I.R.S. didn’t have adequate assets to cowl.
