Rampant identity theft has overwhelmed the Internal Revenue Service, resulting in a backlog of 500,000 unresolved fraud cases, leaving taxpayers without refunds and credits that they are due, the agency’s watchdog wrote in a report to Congress on Wednesday.
The report by the National Taxpayer Advocate described the slow pace of addressing the identity theft cases as a “blemish” on the performance of the I.R.S., which is in the midst of a sweeping modernization campaign that aims to improve taxpayer services. While the I.R.S. was criticized by the watchdog for identify theft delays last year, the backlog has gotten only worse.