Just want to give everyone an update.
I successfully called the IRS and got an appointment. I made about 30 calls at different time of day and they all were dropped by the robot, but then I got put on hold, the robot said the wait time is 16-30 minutes, I waited for about an hour, then they answered. An appointment was available for the next day.
We went to the IRS taxpayer assistance center and filed the federal tax return with W-7, they confirmed my wife's identity and we got her passport back in a couple minutes. They didn't accept the state tax return though, so that one must be filed separately.
Interesting observation: while we were there people were walking in and scheduling appointments without making a call. So even though the IRS website says you must call to get an appointment, you can avoid that by walking in to the local IRS office and asking them to schedule an appointment in-person. That would help me a lot, because calling IRS is a very frustrating experience.
