IRS Prevents Loss of $7 Billion With Identity Theft Detection

The IRS prevented the loss of about $7 billion in revenue as part of its efforts to find and prevent identity theft, according to the agency’s watchdog.

While the IRS for 2024 and 2025 prevented billions in fraudulent tax returns using tax return filters, the IRS doesn’t have all the information it needs to detect fraud, the Treasury Inspector General for Tax Administration said in a Monday report.

TIGTA recommended the agency ask Congress to accelerate the filing deadline for all returns whose current deadline is March 31. The IRS estimates that it could potentially increase revenue protected by $944 million through 2034 if the filing deadline was earlier.

Identity theft cases and waits times have bloated in recent years with the uptick of bad information on social media. In 2025, it took an average of 20 months for identity theft cases to get resolved, according the National Taxpayer Advocate.

Extended case wait times means delays for refunds for victims. In response to TIGTA, the IRS said the agency reduced the rate at which legitimate tax returns were selected by 52% in 2024.

“The IRS must balance its fraud detection efforts against the burden they may cause taxpayer,” TIGTA said.