500,000 Identity Theft Victims Waiting Nearly Two Years for IRS Resolution, Watchdog Tells Congress

The Numbers

More than 500,000 Americans are currently waiting on the IRS to resolve their tax-related identity theft cases, according to a report published Wednesday by the National Taxpayer Advocate. The average wait time is about 20 months, nearly two full years.

Tax-related identity theft happens when a criminal uses someone's stolen Social Security number to file a fake return and collect a fraudulent refund. The real taxpayer then gets flagged by the IRS, and their legitimate refund gets frozen while the agency sorts it out.

For many people, that refund isn't discretionary income. It's rent.

Who Said It

Erin Collins, the National Taxpayer Advocate, wrote in the report: "For many low- and middle-income taxpayers, waiting nearly two years for a refund is not merely an inconvenience — it can mean falling behind on rent, utilities, transportation costs, and other basic living expenses."

Collins leads the Taxpayer Advocate Service, an independent watchdog organization housed within the IRS. She was appointed to the role in 2020 by then-Treasury Secretary Steven Mnuchin during the first Trump administration, not a partisan hire by any recent administration.

The National Taxpayer Advocate is required by law to submit two reports to Congress per year. This is the first of the two for the current cycle, focused on advocacy priorities for the upcoming fiscal year.

This Isn't New — It's Gotten Worse

Collins flagged severe identity theft delays back in 2023, when the backlog sat at roughly 484,000 cases and resolution took about 19 months. Since then, both the backlog and the wait time have grown, according to CNBC's reporting on the document.

The Trump administration inherited a problem that has continued to deteriorate.

The Staffing Piece

The IRS employed 74,000 people at the start of the 2026 tax-filing season. That's down from 102,000 a year earlier, a 27% reduction in one year, according to Collins's report.

A significant portion of those cuts came from Elon Musk's Department of Government Efficiency (DOGE) initiative in 2025. DOGE's stated mission was eliminating federal waste. Whether gutting IRS workforce achieves that or simply shifts the cost onto taxpayers who can't get their refunds is a legitimate policy debate.

The Fair Concern on the Other Side

Skeptics of IRS expansion make a serious argument. The IRS has a documented history of mismanagement, bloat, and targeting abuses, most notoriously the 2013 Tea Party scandal under the Obama administration. Critics reasonably argue that adding more IRS employees doesn't automatically translate into better outcomes for taxpayers; it can just mean more bureaucracy. The agency's identity theft backlog existed and grew during years when staffing was higher. More headcount without structural reform may not fix the underlying problem.

This argument does not, however, resolve the 500,000 people currently waiting 20 months for money the government owes them.

The Crime Side

This isn't only an IRS capacity problem. The FBI reported a 26% year-over-year increase in consumer complaints tied to criminals stealing taxpayer identities to file fraudulent returns, according to the agency's most recent data cited in the report. More fraud means more cases, and a shrinking workforce is being asked to process a growing caseload.

Those two curves moving in opposite directions explain a lot of the current situation.

What the IRS Said

Nothing, as of the report's publication. According to CNBC, the IRS did not return a request for comment.

The Open Question

The Taxpayer Advocate's report outlines the problem and flags it as a congressional priority. What it does not answer is whether IRS leadership or the administration has a concrete plan to reduce the backlog. Collins has been raising this issue since at least 2023 with limited visible response. Congress has received the report. Whether it prompts any funding or structural fix, or simply gets filed away, is genuinely unknown.