A new watchdog report warns that more than half a million Americans are stuck waiting for the Internal Revenue Service to clear cases of stolen identities used to claim fraudulent tax refunds — and the average resolution time has swollen to almost 20 months. The delays, the National Taxpayer Advocate says, are happening as the IRS sheds tens of thousands of employees, a convergence that is straining households that rely on timely refunds.
The report, delivered Wednesday to Congress by the Taxpayer Advocate Service, says roughly 500,000 people are awaiting closure of tax-related identity-theft cases. On average, the IRS now takes about 20 months to resolve those matters, creating prolonged uncertainty for victims who often face immediate financial pressures.
Tax-related identity theft occurs when a fraudster files a return using someone else’s Social Security number to collect a refund. Beyond the immediate loss of a legitimate refund, victims can be forced into lengthy administrative battles with the IRS, and the problem frequently disrupts household budgets.
Erin Collins, who leads the Taxpayer Advocate Service — an independent office within the IRS — says the delays are not trivial. In the report she told lawmakers that extended case timelines can push low- and middle-income taxpayers into missed rent payments, unpaid utilities, or other hardships. She described the system as difficult to navigate and time-consuming for affected taxpayers.
The IRS did not immediately respond to requests for comment on the report.
Collins, appointed to the advocate role in 2020 by then-Treasury Secretary Steven Mnuchin, is required by law to present two reports to Congress a year. This document, the first of the fiscal year, lays out the office’s advocacy priorities — with identity theft high on the list.
The agency’s capacity to handle the caseload has eroded alongside workforce reductions. The report notes that at the start of the 2026 filing season the IRS had about 74,000 employees, down from roughly 102,000 a year earlier — a workforce decline of about 27 percent. The report also points to personnel cuts tied to an initiative labeled the Department of Government Efficiency (DOGE) in 2025 as a factor in the staffing shortfall.
Backlogs and wait times have escalated since Collins first flagged the issue in 2023. At that time the IRS carried about 484,000 unresolved identity-theft cases and averaged close to 19 months to clear them; both totals have since increased.
Federal law enforcement agencies are also reporting more complaints. The FBI told investigators last year that consumer complaints involving criminals stealing taxpayer identities to file fraudulent returns rose about 26 percent year over year.
- Held refunds: Legitimate refunds can be delayed for months while the IRS investigates a fraudulent return.
- Financial strain: Families may fall behind on rent, utilities, or transport costs while waiting for resolution.
- Administrative burden: Victims often must submit documentation and repeatedly contact the IRS to clear their records.
- Broader risk: Identity-theft incidents can ripple into credit and employment records if not resolved promptly.
The report frames the problem as both operational and human: fewer staff and growing case volumes are lengthening processing times, and that delay has concrete consequences for everyday taxpayers. Collins’ office recommends steps to reduce backlogs and speed case resolution, while urging Congress to monitor resources and oversight.
For taxpayers, the immediate takeaway is that identity-theft cases may take well over a year to resolve and that the burden of proof and follow-up largely falls on individuals. Policymakers, meanwhile, face pressure to reconcile agency staffing and processes with a persistent uptick in identity-fraud complaints and the financial fallout for affected households.
As Congress reviews the advocate’s recommendations, the number to watch is the backlog and whether the IRS can stem rising complaints while restoring capacity to address fraud promptly.
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