The Internal Revenue Service (IRS) is currently struggling to resolve a massive backlog of tax-related identity theft cases, leaving over 500,000 Americans waiting in financial limbo. According to the latest report by National Taxpayer Advocate Erin Collins, the average resolution time for these cases has stretched to approximately 20 months. This delay is described as unconscionable, particularly as the volume of identity theft continues to rise nationwide.
The Mechanics of Tax-Related Identity Theft
Tax-related identity theft occurs when a criminal acquires a taxpayer’s Social Security number to file a fraudulent tax return. The goal is to claim a refund before the legitimate taxpayer has filed. In 2025, the FBI’s Internet Crime Complaint Center reported receiving more than 1,000 complaints concerning this type of cybercrime, which represents a 26% year-over-year increase. Once a fraudulent return is filed, the stolen refunds are redirected to bank accounts, prepaid cards, or mail drops managed by the criminals, leaving the actual taxpayer to face administrative delays.
Why the Backlog is Deepening
Staffing shortages at the IRS have significantly worsened the crisis. Driven in part by efficiency measures, the agency’s workforce decreased by 27% in the past year. At the start of the 2026 tax filing season, the IRS employed 74,000 individuals, down from 102,000 the previous year. Unlike automated tax processes, identity theft cases require manual review, individualized assistance, and administrative flexibility. In 2023, the IRS faced a backlog of 484,000 cases taking about 19 months to resolve; that backlog has now expanded past the 500,000 mark with wait times extending to 20 months.
Economic Impact on Lower-Income Taxpayers
For many middle- and lower-income families, the average tax refund of $3,462 is a vital source of income. This year’s average refund increased by 11% compared to the prior year, primarily due to deductions introduced under the One Big Beautiful Bill Act. A survey by LendingTree of over 1,500 tax filers revealed that 46% are depending on their tax refund to cover essential expenses, up from 36% in 2023. Delayed refunds can cause immediate financial distress, leading to missed rent payments, utility shutoffs, and transportation challenges.
Proactive Security Measures
The IRS recommends that taxpayers obtain an Identity Protection PIN (IP PIN) to prevent fraudulent filings. This six-digit code is generated annually and must be entered to validate any tax return filed under your Social Security number. Taxpayers can register for an IP PIN directly on IRS.gov. If you suspect you are a victim of identity theft, you should immediately file a report at IC3.gov. Additionally, placing a credit freeze with Equifax, Experian, and TransUnion can prevent criminals from opening unauthorized accounts in your name.
Frequently Asked Questions (FAQ)
How do I know if someone filed a fake tax return in my name?
Most taxpayers discover tax identity theft when they attempt to e-file their return and it is rejected because a return has already been filed under their Social Security number. You may also receive a letter from the IRS flagging suspicious activity.
What should I do if I am a victim of tax identity theft?
File a report with the FBI’s Internet Crime Complaint Center at IC3.gov, submit an IRS Form 14039 (Identity Theft Affidavit), and contact the three major credit bureaus to place a credit freeze on your accounts.
How long will it take to get my refund if my identity was stolen?
According to the National Taxpayer Advocate, the IRS is currently taking an average of 20 months to resolve identity theft cases and release held refunds.
