The New Problem with IRS Identity Theft

PLUS: Small Business FinCEN Update!

In its most recent annual report to Congress, the Taxpayer Advocacy Service outlines troublesome trends it sees in the processing and administration of tax returns and taxpayer support. By law, the National Taxpayer Advocate’s report must identify the 10 most serious problems taxpayers face in their dealings with the IRS and make administrative and legislative recommendations to address those problems. One of the most critical issues identified in their recent report:
Continuing delays in resolving identity theft cases
Per the report, “For cases closed by the IRS’s Identity Theft Victim Assistance (IDTVA) unit in Fiscal Year 2024, the average time it took the IRS to resolve identity theft cases and issue refunds to the affected victims was almost two years.”
Talk about frustrating! It currently takes up to two years to get a victim’s tax records corrected and receive a refund when you have already been made a victim by the ID thief!
While the Taxpayer Advocacy Service is recommending changes, it will take some time to implement by the IRS. So what do you do in the meantime? Here are some tips:
File early. If you have any reason to believe your identity is compromised, file your tax return as early as possible. For example, if you received notices during the year from any businesses that their records may be compromised and exposed some of your personal information, this is a signal that you may be at risk.
Check your credit reports. Remember, each year the three major credit agencies are required to provide copies of your credit report free of charge. The beginning of the year is a great time to check. If you see anything fishy, file your tax return immediately. These reports can be ordered at: AnnualCreditReport.com
Consider the IRS Identity Protection PIN program. While not for everyone, if you are worried about IRS Identity theft, sign up to receive a unique id or PIN to be used when filing your federal tax return. While it can be a hassle, it will help avoid anyone else filing using your identification.
In the meantime, there is hope that the Taxpayer Advocacy report will motivate the IRS or someone in Congress to take action to help victims receive more timely resolution to their problem.
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FIN-2025-CTA1 February 18, 2025
FinCEN Extends Beneficial Ownership Information Reporting Deadline by 30 Days;
Announces Intention to Revise Reporting Rule
The on then off then on again requirement for small businesses to report their beneficial owners to the federal government is now on again with a new reporting deadline of March 21, 2025. This represents a "stay" of a judge's order to eliminate the requirement. In other words, the filing requirement may be removed, but until it is, most small businesses need to still file the report.
Should you file the report for your business?
Per the notice:
Notably, in keeping with Treasury’s commitment to reducing regulatory burden on businesses, during this 30-day period FinCEN will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks. FinCEN also intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.
The current ruling says yes...but it probably will change if you can read into this notice. Here is a link to the announcement: FinCEN Announcment