IRS RESPONSE TO RECOMMENDATION: The IRS stated this recommendation has already been implemented.

The IRS is keenly aware of the impact identity theft (IDT) has on taxpayers and places a high priority on working the Identity Theft Victim Assistance (IDTVA) inventory accurately and efficiently. Limiting the scope of IDTVA employees as suggested would have a negative impact on the overall taxpayer experience. Further, there are certain IDT cases that inherently require more than 90 days to resolve.

While we cannot limit all IDTVA employees’ work assignments, the IRS is committed to implementing multiple strategies to reduce the identity theft inventory and average cycle time by:

• Limiting IDTVA Customer Service Representatives’ (CSRs) toll-free phone assignments. These assisters are the last ones assigned to phone work and the first ones removed, when call volume warrants.Adding employees skilled in the full scope of IDTVA work to address increases in inventory. During the 1st quarter of FY 2025, we delivered full scope training to approximately 300 additional IDTVA employees.
• Allocating overtime funding to the IDTVA program to increase case resolution volumes.
• Screening IDT cases to determine if they can be closed systemically, as quick closures, can be resolved by non-IDT skilled employees, or were referred to IDTVA in error.
• Providing additional guidance on the necessity of filing Form 14039, Identity Theft Affidavit, to reduce the number of Forms 14039 received by avoiding unnecessary filings.
• Colloborating with Research Applied Analytics Statistics to identify IDTVA cases that fit within identified scheme criteria to pre-identify the fraudulent return for the IDTVA caseworker, reducing the amount of research needed while improving efficiency.
• Leveraging IRS Lean Six Sigma capabilities to identify improvement opportunities within our current work processes.

CORRECTIVE ACTION: 

While we cannot limit all IDTVA employees’ work assignments, the IRS is committed to implementing multiple strategies to reduce the identity theft inventory and average cycle time by:

• Limiting IDTVA Customer Service Representatives’ (CSRs) toll-free phone assignments. These assisters are the last ones assigned to phone work and the first ones removed, when call volume warrants.Adding employees skilled in the full scope of IDTVA work to address increases in inventory. During the 1st quarter of FY 2025, we delivered full scope training to approximately 300 additional IDTVA employees.
• Allocating overtime funding to the IDTVA program to increase case resolution volumes.
• Screening IDT cases to determine if they can be closed systemically, as quick closures, can be resolved by non-IDT skilled employees, or were referred to IDTVA in error.
• Providing additional guidance on the necessity of filing Form 14039, Identity Theft Affidavit, to reduce the number of Forms 14039 received by avoiding unnecessary filings.
• Colloborating with Research Applied Analytics Statistics to identify IDTVA cases that fit within identified scheme criteria to pre-identify the fraudulent return for the IDTVA caseworker, reducing the amount of research needed while improving efficiency.
• Leveraging IRS Lean Six Sigma capabilities to identify improvement opportunities within our current work processes.

TAS RESPONSE: Many IDTVA cases in the inventory backlog are aged and victims are experiencing excessive processing and refund delays. Despite the other IRS strategies, average IDTVA case cycle time is currently 592 days, only 84 days shorter than previously reported. The IRS reasons that keeping IDTVA CSRs on only IDTVA would negatively impact the overall taxpayer experience yet ignores the negative experiences that many victims have endured for years. While TAS recognizes the IRS balances competing priorities, the IRS is encouraged to prioritize resources in support of expediently reducing the IDTVA backlog and delays that are weakening the taxpayer rights of victims.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: The IRS stated this recommendation has already been implemented.

The IRS is unable to implement an upfront screening process as recommended because of limited IDTVA resources and systemic case assignments. However, a screening process was implemented to identify cases meeting pre-determined criteria to classify cases based on potential systemic closures, quick closures, work that can be completed by non-IDT trained employee, assignments based on skill set, or the impact to the taxpayer (e.g., potential refund). Cases identified by the query are reviewed for validity. In addition to the data queries, the following are the ongoing and proposed initiatives designed to help reduce IDT cycle time through this screening process:

• Systemic Closures – we continuously review our inventories to identify systemic case closure opportunities.
• Specialized Skills – assigning IDTVA cases to employees based on skill sets and training.
• High Taxpayer Impact – identifying identity theft cases that have a potentially high impact on the victims.

The IRS will continue to review additional segments of the IDTVA inventory to identify more potential systemic closures, quick closures, or work that may be completed by non-IDT trained IDTVA Accounts Management employees. In addition to reviewing the inventory, we continue to solicit employee feedback about the issues they are seeing and encourage their recommendations for reducing the IDTVA inventory.

CORRECTIVE ACTION: N/A

TAS RESPONSE: It is positive that the IRS is conducting some screening of its IDTVA inventory to identify and organize certain types of cases, especially for cases that potentially have high impact on victims. However, screening IDTVA cases earlier in the process would enable the IRS to timely categorize cases and identify those that need worked in a different part of the IRS, that can be quickly resolved and closed, or where there is a potential refund. Earlier screening would position the IRS to better manage its IDTVA inventory and for fewer cases to become aged unnecessarily.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: The IRS stated this recommendation has already been implemented.

An acknowledgement letter is systemically sent to taxpayers if the Form 14039, Identity Theft Affidavit, is attached to their return. The case is reviewed to exercise caution when corresponding with the taxpayer and determination made prior to disclosing any account information to the claimant. The closing contact acknowledges receipt of the taxpayer’s documents and explains the closing resolution.

CORRECTIVE ACTION: An acknowledgement letter is systemically sent to taxpayers if the Form 14039, Identity Theft Affidavit, is attached to their return. The case is reviewed to exercise caution when corresponding with the taxpayer and determination made prior to disclosing any account information to the claimant. The closing contact acknowledges receipt of the taxpayer’s documents and explains the closing resolution.

TAS RESPONSE:The IRS sends systemic acknowledgment letters when identity theft affidavits are filed with tax returns, but its acknowledgment is inconsistent when they are not. Not all identity theft is discovered during filing season when taxpayers prepare and file tax returns. For taxpayers that file identity theft affidavits independent of their return, the IRS may not acknowledge receipt of their claim or provide any updates until it resolves the IDTVA case, which often takes several months and possibly years. Taxpayers that file their identity theft affidavits independent of their returns have a reasonable right to be informed.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: ​The IRS continually explores technologies to automate and develop tools that improve research capabilities and efficiency for IDTVA employees working the identity theft inventory and helping victims of identity theft. We developed research tools to help IDTVA employees to determine the case resolution path. The Dependent Related IDT Case tool was released on July 30, 2024. The IDT streamline tool and an Integrated Automation Technologies (IAT) Form 9409, IRS/SSA Wage Worksheet, tool are currently under development. We are continually working to develop and enhance tools to increase efficiencies for processing identity theft cases.

CORRECTIVE ACTION: We are continually working to develop and enhance tools to increase efficiencies for processing identity theft cases.

TAS RESPONSE: TAS encourages the IRS to continuously explore upgrading its technologies and tools to improve its IDTVA efficiencies. Improved technologies and tools would reduce tedious and time-consuming research and analysis that must be manually completed in IDTVA cases. Tax-related identity theft is an evolving and complex issue that the IRS must keep pace with being equipped to provide accurate and timely resolution.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): Ongoing

IRS RESPONSE TO RECOMMENDATION: The IRS stated this recommendation has already been implemented.

The National Taxpayer Advocate has well established hardship criteria for referring taxpayers to TAS, including identity theft victims. Identity theft victims have the right to receive assistance from TAS if experiencing economic harm or seeking help in resolving tax problems that have not been resolved through normal channels. Employees refer IDT taxpayer cases to TAS when the case criteria are met.

CORRECTIVE ACTION: Employees refer IDT taxpayer cases to TAS when the case criteria are met.

TAS RESPONSE: TAS is quite mindful of its own hardship criteria. The recommendation proposes the IRS develop its own criteria so it may expedite cases for victims that are experiencing the greatest economic hardship. By adopting its own hardship criteria for IDTVA cases, the IRS would be eliminating the need for taxpayers to submit their case to TAS and to then have TAS work the case with the IRS – thereby developing a more direct and less burdensome way for taxpayers who are experiencing significant hardship to have their IDTVA cases resolved more promptly. Considering the delays in resolving IDTVA cases, it seems advantageous for all that the IRS fully embrace a more direct method by which it can expedite cases where taxpayers are experiencing significant economic hardship, and thus eliminate the need to add any unnecessary back-and-forth between TAS and IDTVA operations.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: ​The IRS appreciates the support for detecting and mitigating refund fraud while working to decrease burden on taxpayers who have filed legitimate returns and continually evaluates the filters to address this balance. The filters are used to protect taxpayers that had their tax related data compromised due to data breaches/losses. Also included are schemes due to social media promotions that were originally identified as potential IDT. These cases were not treated as IDT; however, these cases were referred for other non-IDT compliance treatments including Frivolous Filer, audits, and/or Automated Questionable Credits. The IRS continues to collaborate with internal and external partners, including TAS, to refine and automate refund fraud filters where appropriate. Each year several factors are considered to make the most efficient selections and improve performance while continuing to achieve a continued high level of protection.

Roughly 98% of refund returns are not selected by fraud filters. The remaining 2% often have reported information that may not adhere to known patterns and may not have the information returns needed to validate reported amounts. Without proper validation, the IRS risks issuing improper refunds. The IRS strives to properly balance fraud detection and minimizing improper payments against the taxpayer experience and desire for fast return processing.

When a return is selected for pre-refund review, the goal is to validate the tax return and issue a refund as quickly as possible. Taxpayers can authenticate their identity by phone, on the web, or in person at a Taxpayer Assistance Center. Once the authentication is successful, the processing of the taxpayer’s return is completed and the refund is quickly released, generally within 21 days. A positive taxpayer experience is critical, but the risks are too high in the current environment to modify the pre-refund return selection criteria to arbitrarily set the false detection rate at a certain percentage.

CORRECTIVE ACTION: N/A

TAS RESPONSE: TAS encourages the IRS to frequently evaluate its TPP filters to ensure it is mitigating the percentage of taxpayers that filed legitimate returns and get ensnared into the TPP in error. Following selection to the TPP, taxpayers that filed legitimate returns must then successfully authenticate their identity with the IRS for it to complete return processing and issue any refunds. The IRS plays a critical security role in tax administration and its efforts to combat fraud should continuously strive to achieve a balance that results in the most minimal impact on taxpayer rights as possible.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A