The Internal Revenue Service is making strides in assisting victims of tax-related identity theft more promptly and making fewer errors on cases, thanks to a more centralized approach, according to a new government report.

The report, from the Treasury Inspector General for Tax Administration, found the IRS has improved its timeframes to close taxpayer ID theft cases by centralizing its victim assistance services into a single organizational directorate and by improving its processes and procedures.

TIGTA issued a report in March 2015 where it discovered the IRS took an average of 278 days to close identity theft cases. That same July, the IRS centralized a number of functions that were helping identity theft victims and formed a single IRS organization called the Identity Theft Victim Assistance (IDTVA) Directorate. The goal was to improve taxpayers’ experience of working with the IRS to resolve their identity theft cases.

Treasury Inspector General J. Russell George addressing a House subcommittee
Treasury Inspector General J. Russell George addressing a House subcommittee Bloomberg News

TIGTA reviewed 51,749 taxpayer-initiated identity theft refund cases closed by the IDTVA organization between Aug. 1, 2015, and May 25, 2016, and found an improvement in case closure timeframes. The IRS closed cases within an average of 166 days. That was 112 days (or 40 percent) less than the 278 days that TIGTA reported in 2015. The new report attributes the greater timeliness to clearer lines of responsibility at the IDTVA and improved case processing guidance now.

TIGTA also found improvement in the number of errors when the IRS resolved identity theft cases. In its 2015 review, TIGTA found IRS employees did not correctly resolve 11 percent of the cases, leading to the victim receiving the wrong tax refund amount. That error rate dropped to 7 percent for the period between Aug. 1, 2015, and May 25, 2016.

“Refund fraud adversely affects the ability of innocent taxpayers to file their tax returns and timely receive their tax refunds, often imposing significant personal hardship,” said TIGTA Inspector General J. Russell George in a statement. “The IRS has improved its assistance to these victims of identity theft.”

TIGTA did find one area where the IRS could improve. Managers in the new identity theft assistance group are not consistently conducting monthly reviews of employees’ identity theft casework as required. TIGTA suggested the IRS ensure its managerial reviews are conducted in compliance with internal guidelines. The IRS agreed with the recommendation.

“The dramatic rise in tax-related identity theft (IDT) during the first part of this decade presented unique challenges for the IRS in how victims of such fraud could be assisted quickly and with as little burden to them as possible,” wrote Kenneth C. Corbin, commissioner of the IRS’s Wage and Investment Division, in response to the report. “As the scope of IDT became better defined, it became clear that victim assistance activities should be streamlined under one chain of command.”

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Michael Cohn

Michael Cohn

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.