The Internal Revenue Service runs dozens of computer filters designed to catch fraudulent tax returns before a refund goes out the door, and those filters also catch a lot of honest taxpayers along the way. A new watchdog report puts numbers to that tradeoff: of the roughly 7.5 million individual tax returns the IRS’s identity theft filters selected for review in calendar years 2024 and 2025, about half turned out to belong to real taxpayers with nothing to hide. Every one of those taxpayers had a refund held up while the agency sorted out who was telling the truth.
76 Filters Screening $82 Billion in Refunds
For the 2025 filing season, the IRS ran 76 identity theft filters against incoming tax returns, each built around characteristics associated with known or suspected fraud, according to the Treasury Inspector General for Tax Administration report issued May 13, 2026. Across calendar years 2024 and 2025 combined, those filters selected about 7.5 million returns claiming a combined $82.1 billion in refunds. Selected returns are generally barred from posting to a taxpayer’s account — and a refund from going out — until the IRS can confirm the return is legitimate, either by verifying it internally or by requiring the taxpayer to authenticate their identity by phone, online, by mail or in person.
What a stalled refund actually means: Each status message and each notice points to a different cause, and each cause has its own next step. Read the notice decoder in The IRS Refund Recovery Kit.
Only 329,000 of the 7.5 Million Were Confirmed Identity Theft
Of the 7.5 million returns the filters flagged, TIGTA found the IRS ultimately confirmed identity theft in just 329,000 cases — about 4.4 percent — while protecting a combined $7 billion in refunds from going to fraudsters, a case file logged with federal audit regulators under report number 2026-400-019. The rest were resolved as legitimate, either because the IRS’s own internal review cleared the taxpayer without ever contacting them, or because the taxpayer went through the authentication process and proved who they were. In calendar year 2024 alone, the filters selected 4.4 million returns claiming $42.5 billion, of which 185,000 were confirmed identity theft and $4.2 billion protected; in 2025 through late November, the filters selected 3 million returns claiming $39.6 billion, with 144,000 confirmed and $2.8 billion protected.
A Single Filter Change Tripled Selections in One Category
The report traces part of the burden to a specific filter adjustment the IRS made in processing year 2024 to catch a rise in a particular kind of suspected fraud. After the change, tax return selections in that category jumped 237 percent, from 78,000 in processing year 2023 to 263,000 in processing year 2024. The tradeoff showed up immediately in the false-positive rate for that category, which rose from 22 percent to 50 percent over the same period, meaning half the returns caught by the retooled filter belonged to real taxpayers. TIGTA credited the IRS with continuing to adjust its filters and thresholds to react to new fraud patterns, but noted that every such adjustment risks catching more legitimate returns along with the fraudulent ones.
How the IRS Tries to Clear Legitimate Filers Faster
Not every taxpayer caught by a filter has to prove their identity in person or by phone. The report found the IRS resolved 955,000 of the selections from calendar years 2024 and 2025 without ever sending the taxpayer a notice, using internal data matching to independently confirm the return was legitimate. When a notice is unavoidable, the IRS issued 3.7 million authentication notices in calendar year 2024 and 2.8 million in 2025, and for taxpayers who completed the process in those two years, the return posted to their account within 13 days on average once they authenticated. The agency also leans on outside partners: through the Information Security Analysis Center, a network of state tax agencies, financial services companies and tax-industry firms that share fraud alerts in real time, the IRS estimates it has protected almost $277.7 million in revenue since the partnership began in 2017, including $9.2 million in confirmed identity-theft refunds and another $49.3 million in potential-fraud refunds flagged during fiscal year 2024 alone. Of the 312 ISAC alerts the IRS received in fiscal year 2025, 94 — about 30 percent — led to a concrete action, such as building a new filter or reviewing a specific account.
The False-Positive Rate Has Been High for Years
The 2024 numbers were, if anything, an improvement. TIGTA found the IRS’s identity theft filters selected legitimate tax returns at an average rate of 59 percent from processing years 2018 through 2022, ranging as high as 63 percent in the worst year. That rate fell to 55 percent in processing year 2023 and 52 percent in processing year 2024 as the IRS’s identity theft detection systems were refined — the 52 percent figure behind the “about half” of the 7.5 million returns flagged over the two-year period. Even at the improved rate, the raw count is not small: the filters selected 2.4 million legitimate tax returns in calendar year 2024 alone, equal to 1.4 percent of the 163.5 million tax returns filed that year. TIGTA’s one formal recommendation in the report had nothing to do with the filters themselves; it urged the IRS to work with the Treasury Department on legislation moving up the March 31 filing deadline for forms like the 1099-R and W-2G, so fraud-detection systems have that income data before refunds go out rather than months afterward. IRS management agreed to share the recommendation with Treasury’s Office of Tax Policy.
What a Frozen-Filter Notice Doesn’t Tell a Taxpayer
A return frozen for identity theft and a return delayed for a routine math error land a taxpayer in the same place: a status tool that says little beyond “still processing.” What actually ends the hold depends on which letter shows up in the mailbox, and few taxpayers realize how much the required response varies between them.
The IRS Refund Recovery Kit is a 13-page kit with a refund status tracker spreadsheet and the 3-year deadline for claiming a late refund.
Look up the refund-trace steps for Form 3911 in The IRS Refund Recovery Kit.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources.
