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Why Identity Theft Victims Wait 9 Months for Their Tax Refund

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Hundreds of thousands of taxpayers experience significantly delayed refunds every year because of tax-related identity theft. That delay lasted an average of 278 days — more than nine months — according to a new audit of tax accounts resolved in fiscal year 2013 (Oct. 1, 2012 through Sept. 30, 2013) by the Treasury Inspector General for Tax Administration. The audit was intended as a follow-up on a previous review to see if the IRS had improved its dealings with identity theft victims.

Well, the delays are still significant, but things seem to have gotten a bit better. The average delay is 34 days shorter than TIGTA found in a previous review, but such long delays can be a huge financial and emotional burden for victims in need of their refunds.

On top of the long waiting periods, TIGTA found that 10% of identity theft cases the IRS resolved were done so incorrectly, resulting in further delays in getting the victim his or her accurate refund. The review found that the time from when the IRS received victims’ tax returns until the IRS paid the correct refund ranged from 16 to 762 days.

Much of the delays come from having the cases repeatedly reassigned to (and sitting on the desks of) assistors. In its prior review, TIGTA found that cases were reassigned an average of 10 times before being resolved, and the frequent transfers often contributed to inactivity on the cases. It all adds up to longer delays between sending a tax return and receiving a refund.

This most recent audit showed that transfers have declined — a case is now reassigned to an average of seven assistors before getting resolved — and the average inactivity on the cases declined, as well, from 277 days to 254 days. Auditors asked accounts management officials about the reasoning behind frequent transfers and summarized the interviews in the report:

“The officials could not recall the specific circumstances as to why these cases were frequently reassigned among the holding queues. … The IRS informed us that the cases are complex and IRS management is more interested in identifying a trained employee to work an identity theft case than the number of case reassignments. Thus, cases can remain in a manager’s inventory, unassigned to an assistor, until the manager finds an available identity theft trained assistor.”

Like many issues at the IRS, the delays stem from limited resources that continued to be strained by budget cuts.

Tax-related identity theft is a huge problem. The IRS stopped $50 billion in fraudulent tax returns related to identity theft last year, but it lost $5.2 billion to the same problem. Consumers caught up in it may want to plan to deal with the IRS with a mix of patience and persistence. Each year, it’s a good idea to file your taxes as soon as you can, because identity thieves’ strategy is to get to your refund before you do. Additionally, monitor your credit for signs of identity theft on a regular basis, so you can avoid or address other financial messes that result from fraud. You can see a summary of your credit report, updated monthly, on Credit.com.

More on Income Tax:

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  • Emily

    I understand the waiting period can be a while but my problem is I can’t even find out online about the status of my refund. I faxed my return on April 8th as directed by the IRS representative after I have been a victim of identity theft. It’s almost August now and I am getting worried if my refund had already been sent (and got lost or worse, stolen) or if it is still being processed. Is there a number to call? I feel like as a victim I am still being punished by the people that should be helping me.

    • http://www.Credit.com/ Gerri Detweiler

      The IRS website says: “For victims of identity theft who have previously been in contact with the IRS and have not achieved a resolution to their case, you may contact the IRS Identity Protection Specialized Unit, toll-free, at 800-908-4490. If you are unable to get your issue resolved and are experiencing financial difficulties, contact the Taxpayer Advocate Service toll-free at 877-777-4778.”

      • jennyct

        What exactly is a hardship anyway? Having to use your credit card to pay medical bills? The interest they pay is much less – but since I do have credit cards, I guess all I will lose is my credit card interest. It is still not fair.

  • http://www.Credit.com/ Gerri Detweiler

    Resolving tax problems is not our area of expertise, so our best suggestion for you is to either try contacting the Taxpayer Advocate at 877-777-4778 or visiting a local Taxpayer Assistance Center in person. Another option would be to contact your elected officials in Washington. Many times the staff members whose job is to help constituents cut through red tape at federal agencies.

    • http://outsidetheautisticasylum.blogspot.com/ Theodore Seeber

      The taxpayer advocate will just re-route you back to the automated Where’s My Refund number. Absolutely worthless.

    • http://theenchantedcrafter.blogspot.com/ Beadmama

      The tax advocate is not answering their phones due to high volumes of calls….what kind of bs is that?

  • jennyct

    Still waiting for 2014’s. Told IRS about fraud in April, and they tried to deposit funds in fraud account in July. Funds bounced back to check form and I received it, but unfortunately it’s not mine so I had to send it back. BUT apparently it’s not easy to get your own funds. If next year comes and I owe… do I still have to pay or can I subtract the difference? Just kidding… I know the answer.

  • http://theenchantedcrafter.blogspot.com/ Beadmama

    Filed my taxes on april 15th and was told someone else had filed using my number. Ok..so then followed all the rules to file the forms BUT HAVE NOT HEARD ONE PEEP FROM THE IRS regarding any investigation or when we might expect our return. I sure hope that the IRS is going to be paying interest on keeping our money this long!!! They sure would make us pay interest if we had kept the payement out this long!! It is now Dec. 7th and we still have not heard a word or anything from the IRS about our return. Also you can not even call them because they hang up on you saying that they are overwhelmed with calls regarding this. I am frustrated as to why this is taking so long and also why they are not even communicating with their tax payers!!!
    Is there not anywhere or any number where someone can get any information. Not even the tax advocacy numbers are answering their phones.

  • Nothappy

    We filed our taxes in March, 2014. Prior to filing, we received a letter from the IRS stating that our return was under investigation – someone tried to steal our identity. We paper filed, as directed, by the IRS. To date, being December 19, 2014, we have not received our refund. I check our status at the “Where’s my Refund” site and they show no trace of it. I’ve called the IRS on numerous occasions only to be told that they are processing it. I believe it is getting out of hand now. Our medical bills are going to go into collections if we do not pay soon! There should be some sort of recourse.

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