More than half a million Americans are currently locked in a prolonged waiting game with the Internal Revenue Service (IRS). According to a scathing new report from the National Taxpayer Advocate, the agency now takes an average of 20 months to resolve cases of tax-related identity theft. For many, this administrative logjam means vital refund money remains out of reach for nearly two years.
National Taxpayer Advocate Erin Collins labeled these systemic delays “unconscionable,” warning that the backlog continues to expand rather than contract. As tax fraud operations grow increasingly sophisticated, the mismatch between rising cybercrime and depleted agency resources has created a worst-case scenario for victimized filers.
The Anatomy of Tax-Related Identity Theft
Tax-related identity theft is a highly organized financial crime. Fraudsters use stolen Social Security numbers to submit falsified tax returns early in the filing season, claiming lucrative refunds before the legitimate taxpayers even submit their paperwork. The stolen funds are quickly routed to prepaid debit cards, temporary bank accounts, or mail drops controlled by criminal networks.
In 2025, the FBI’s Internet Crime Complaint Center recorded a 26% year-over-year surge in tax fraud complaints, exceeding 1,000 reported cases. When the actual taxpayer eventually files, the IRS flags the duplicate Social Security number, triggering a bureaucratic freeze. The victim’s real refund is withheld, pushing them into a manual verification pipeline that is notoriously difficult to navigate.
Staffing Declines Fueling the 20-Month Wait
The timing of the current backlog is closely linked to recent shifts in federal workforce levels. Prompted by cost-cutting initiatives from the Department of Government Efficiency, the IRS has experienced dramatic staffing contractions. At the start of the 2026 filing season, the agency’s headcount stood at 74,000 employees—a 27% reduction from the 102,000 workers active just one year prior.
While automated systems handle simple, clean returns, complex identity theft resolutions require manual validation and human oversight. Because these departments are heavily understaffed, processing times have worsened. In 2023, the IRS faced a backlog of 484,000 cases with an average resolution time of 19 months. Today, the backlog has climbed past 500,000 cases, and the wait time has stretched to 20 months.
Severe Socioeconomic Strain on Households
For low-to-middle-income families, a tax refund is often the largest single financial windfall of the year. This filing season, the average tax refund has reached $3,462, representing an 11% increase over the previous year. This rise is largely driven by updated deductions introduced under the One Big Beautiful Bill Act championed by President Donald Trump.
When these funds are delayed for nearly two years, the fallout is severe. A survey conducted by LendingTree of more than 1,500 tax filers revealed that 46% are depending on their refunds to stay afloat financially, marking a significant increase from the 36% reported in 2023. Delayed payments force families to fall behind on housing, transportation, utility bills, and other essential living expenses.
Actionable Steps: How to Protect Your Identity
To defend against tax-related fraud, tax experts and the IRS strongly advocate for the use of an Identity Protection PIN (IP PIN). This unique, six-digit security code is issued annually by the IRS and must be entered on your electronic or paper tax return to verify your identity. Without this code, the IRS will automatically reject any return filed under your Social Security number, blocking identity thieves from submitting fraudulent claims. Taxpayers can sign up for the IP PIN program online at IRS.gov.
If you suspect you have already fallen victim to identity theft:
- Submit an immediate report to the FBI’s Internet Crime Complaint Center at IC3.gov.
- Request a credit freeze with the three major credit bureaus: TransUnion, Equifax, and Experian, to block unauthorized new accounts.
- Obtain an IP PIN from the IRS to secure future filings; verified victims are typically enrolled in the program automatically.
Frequently Asked Questions (FAQ)
1. How does tax-related identity theft happen?
Tax-related identity theft occurs when a criminal obtains your Social Security number—often through data leaks, phishing, or the dark web—and uses it to file a fake tax return. They claim a fraudulent refund and have it sent to their own bank account before you file your legitimate return.
2. What is an IRS Identity Protection PIN (IP PIN), and how do I get one?
An IP PIN is a temporary six-digit security code assigned to a taxpayer. It prevents anyone else from filing a tax return using your Social Security number. You can register for one by visiting the Identity Protection PIN section on IRS.gov. A new code is generated for you every year.
3. What should I do if my identity has been stolen and my refund is delayed?
You should immediately file a report at IC3.gov to notify law enforcement. Contact the IRS to begin the verification process, and place a credit freeze with Equifax, Experian, and TransUnion to prevent further financial exploitation while the IRS resolves your case.
