IRS has improved taxpayer services but is slow to resolve ID theft, an independent watchdog says

WASHINGTON — The IRS boosted taxpayer services through Democrats’ Inflation Reduction Act but still faces processing claims from a coronavirus pandemic-era tax credit program and is slow to resolve certain identity theft cases, according to an independent watchdog report released Wednesday. She said “the IRS has made major strides” with the help of the billions of dollars in multiyear funding, though she notes that “IRS service remains far from perfect.” Remaining service gaps include prolonged delays in resolving claims from the nearly half a million taxpayers whose identities were stolen by fraudsters who received a refund on their behalf. “Although the IRS has processed several hundred thousand claims in recent months, it was still sitting on a backlog of about 1.2 million claims as of October 26, 2024,” Collins said in her Wednesday report. “Many claims have been pending for more than a year.” IRS Commissioner Daniel Werfel said “things are trending in a very positive direction in terms of our performance in taxpayer service,” but still, “I view the identity theft issue as our largest current service gap.” He said the agency is seeing higher numbers of theft victims overall since before the pandemic, in part because scammers are increasingly moving to online schemes.