Identity Theft Slows Federal Tax Refunds


2014 1040 Individual Tax Return

Victims of identity theft continue to experience delays and errors in receiving Federal tax refunds, according to a report publicly released by the Treasury Inspector General for Tax Administration (TIGTA).

This audit is a follow up on a report released in 2013 by TIGTA which concluded that the Internal Revenue Service (IRS) was not providing quality customer service to identity theft victims. The objective of the report was to determine whether the IRS is improving its assistance to these victims.

The 2013 report found, on average, the IRS took 278 days to resolve the tax accounts of identity theft victims who were due a refund. That is an improvement over the average 312 days it took the IRS to resolve tax accounts of identity theft victims due a refund in Fiscal Year (FY) 2012. This data comes from a sample of 100 identity theft tax accounts resolved in the Accounts Management function in FY 2013.  

Refund fraud is an obstacle for innocent taxpayers. Although the IRS is making progress, those who have been affected by refund fraud deserve better. TIGTA’s recent review has found that the IRS continues to make errors and release misleading data.

  1. The IRS continues to make errors when resolving tax accounts of identity theft victims. Ten percent of the 267,692 taxpayers whose accounts were resolved were done so incorrectly. These errors can result in the delay of refunds or incorrect refund amounts.
  2. The misleading information from the IRS reports related to the time period for case processing and resolution. For example, the IRS informs taxpayers who inquire about the status of their identity theft case that cases are resolved within 180 days when, in fact, on average, it took the IRS 278 days to close the cases that it resolved in FY 2013.

Our professionals continue to monitor this issue and we will provide updates as warranted.