The IRS continues to face major challenges in resolving identity theft-related tax return issues, according to the National Taxpayer Advocate’s latest mid-year report to Congress. As of April 15, roughly 387 identity theft cases remain unresolved, with average resolution times stretching to nearly 20 months. 

The Taxpayer Protection Program (TPP), which handles flagged returns, relies on filters to identify potential identity theft. When a return is flagged, the IRS sends a letter requesting identity verification.

However, the taxpayer advocate’s report notes that many of these letters go answered, and no follow-up is required. By the end of filling of filing season, about 1.5 million such letters had not received a response. 

Bloomberg reports that this lack of response contributes significantly to the growing backlog. In a past IRS sampling study, only 7 percent of flagged taxpayers responded to identity verification requests. Among those, nearly 50,000 were found to be legitimate claims that remained frozen due to missing documentation. 

The taxpayer advocate expressed concern concern that the agency’s limited outreach, especially the one-letter policy, and continued staffing reductions may further delay processing. While improvements in filtering have reduced the number of false positives, communication breakdowns persist. 

These delays can be especially difficult for lower-income taxpayers who rely on their refunds to cover essential expenses. The taxpayer advocate’s report urges the IRS to improve the clarity of its communication and adopt more effective methods to reach affected taxpayers, in order to prevent further harm and reduce long-term processing delays.