If someone 'steals my identity' and gets my tax return money before I do, it could be quite a lot of work for me to prove to the IRS that it was stolen and that I should get the money. Which shifts the burden of dealing with identity theft onto legitimate claimants.

I wouldn't be surprised if this same thing could happen with social services, but I don't have much experience with the system.

In other words, I'm not sure if the overall problem we're trying to solve is simply "avoid waste" - it might be more like "prevent the average person from having their identity stolen and their time/money wasted". Which seems like a problem worth trying to solve even if the incidence is relatively low?