Taxpayer Advocate’s annual report to Congress notes IRS successes and weaknesses

The 2025 filing season was a measured success for the IRS, but the agency has lingering weaknesses when it comes to assisting identity theft victims, according to the National Taxpayer Advocate’s Objectives Report to Congress for the 2026 fiscal year. The report also noted that the IRS’s staff has been reduced by 25% since the beginning of 2025, likely leading to reduced taxpayer services and enforcement.

National Taxpayer Advocate Erin Collins’s report found the IRS has rebounded from the COVID-19 pandemic disruptions to provide much-improved taxpayer services, and most taxpayers filed their returns, paid their taxes and received refunds without any direct intervention from the agency.

The report included updated statistics on the 2025 filing season:

• 140 million individual returns received
• 138 million individual returns processed
• Average refund amount: $2,942
• 81 million refunds issued by direct deposit

During processing the IRS suspended more than 13 million individual returns pending further review, with 2.1 million being suspended after the agency’s identity theft filters flagged them. The IRS sent notices to the affected taxpayers saying they must authenticate their identities or address other irregularities in their returns before the agency can continue processing them.

Weaknesses in assisting identity theft victims

The IRS’s performance in resolving identity theft victim assistance (IDTVA) cases is proceeding at a “glacial pace,” the report found. Generally, the IRS addresses two categories: returns flagged by processing filters as potentially fraudulent and cases where an identity thief has filed a return using the name and Social Security number of a legitimate taxpayer.

In cases where a return is flagged as potentially fraudulent, the taxpayer is usually required to verify their identity, and cases are usually resolved within several months. However, when a taxpayer’s information is used to file a fraudulent return, the IRS takes an average of about 20 months to resolve their cases. The report found the delays disproportionately affect vulnerable populations who depend on their refunds to meet basic living expenses.

IRS leadership has repeatedly assured Collins that reducing the time for resolving IDTVA cases is a high priority, but the time it takes to resolve them remains unacceptably long, Collins notes in her report.