IRS has improved taxpayer services but is slow to solve identity theft, independent watchdog says

WASHINGTON (AP) – The U IRS boosted taxpayer services through Democratic Inflation Reduction Act but still makes the transformation claims from a tax credit program in the era of the coronavirus pandemic and is slow to solve some cases of identity theft, according to an independent watchdog report released Wednesday.

“For the first time since I became the National Taxpayer Advocate in 2020, I can start this report with good news: The taxpayer experience has improved significantly,” Erin M. Collins wrote in her annual report 2024 to Congress.

She said “the IRS has made great strides” with the help of billions of dollars in multi-year funding, although she notes that “IRS service remains far from perfect.”

Remaining service gaps include protracted delays in resolving claims from nearly half a million taxpayers whose identities were stolen by fraudsters who received a refund on their behalf. Delays have increased from 19 months in 2023 to 22 months in 2024, according to the report.

Additionally, the report says there have been long delays in resolving eligible Employee Retention Credit claims filed by employers who rely on those refunds to stay in business.

The Employee Retention Credit, or ERC, was designed to help businesses retain employees during pandemic-era shutdowns, but immediately became a magnet for fraud. Its complex eligibility rules allow scammers to target small businesses, offering help for a fee – even if they don’t qualify.

In September 2023, the The IRS has announced a hiatus to accept applications for the tax credit until 2024 due to growing concerns that an influx of applications was fraudulent.

“Although the IRS has processed several hundred thousand claims in recent months, it was still sitting on a backlog of approximately 1.2 million claims as of October 26, 2024,” Collins said in the his Wednesday report. a year.”

IRS Commissioner Daniel Werfel said that “things are trending in a very positive direction in terms of our performance in serving taxpayers,” but also, “I see the problem of identity theft as our biggest current lack of service.” He said the agency is seeing a higher number of theft victims overall than before the pandemic, in part because scammers are increasingly moving into online schemes.

Werfel said the agency is adding more resources to the problem and streamlining identity theft cases by distinguishing between complex and simpler cases to resolve taxpayer issues more quickly.

Among other recommendations, the taxpayer advocate asks Congress to expand the jurisdiction of the United States Tax Court to hear refund cases, give the Low Income Taxpayer Clinic program more financial leverage to help the taxpayers and requires the IRS to process requests for refunds or credits in a timely manner. way

The Story Continues