IRS Struggles to Help Victims of Identity Fraud
Policy + Politics

IRS Struggles to Help Victims of Identity Fraud

iStockphoto/The Fiscal Times

It’s been a challenging tax filing season for the Internal Revenue Service. A never-ending stream of news reports painting a dreary picture of an understaffed, cash-strapped agency that can barely field calls from confused taxpayers requesting help with their tax returns.

Though long crowded lines at the agency’s Taxpayer Assistance Centers is an annoying and inconvenient problem, IRS’s auditors say the agency has an even bigger problem to worry about this year--helping victims of identity theft. What’s worse, the auditors say the agency misled them about how quickly they were resolving the identity theft cases.

Related: Just Try Getting Through to the IRS for Tax Help

For example, the IG said the IRS took an average 278 days to resolve identity theft cases in 2013, in contrast to the agency’s claims that it took only about 180 days or six months.

The auditor’s reviews found that about 10 percent of the cases that the IRS claimed it had resolved were done incorrectly and were loaded with errors. Unsurprisingly, that further delayed the process. In some cases, victims received incorrect refund checks.

Related: The IRS Tax Scam That Can Rob You Blind

The IG defines identity theft as an incident that occurs when a criminal uses personal information from a taxpayer to file a fraudulent return to claim a tax refund.

The IRS assisted 875,000 victims of tax identity theft last year alone.

For its part, the agency said it has improved its process to resolve identity theft. It claims that it takes about 120 days to close a case—well below what the IG concluded from its review.

The report comes at a tough time for the IRS, which has absorbed deep budget cuts. Since 2010, its budget has been slashed by $1.2 billion or 17 percent.  

At the same time, the IRS’s workload has increased –it’s now responsible for enforcing 40-some provisions under the president’s health care law on top of its usual work.

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