WASHINGTON, Sept. 29 (Nationwide Times) — The federal government loses an estimated $116 billion to $304 billion a year to tax fraud, yet the IRS has no antifraud strategy or designated body to coordinate its response, the Government Accountability Office found in a report released Sept. 25, 2026.
The finding does not mean the IRS has no fraud controls. It means the agency has not set out a coordinated approach to managing tax fraud risks, according to GAO. The auditors recommended that the IRS develop a strategy and designate an entity to oversee that work. The IRS partially agreed with both recommendations, which GAO listed as open.
GAO built its annual loss estimate from IRS cases involving fraud or potential fraud, possible fraud within the gap between taxes owed and taxes paid, and tax evasion tied to economic activity deliberately hidden from the government. It used data and other information from 2018 through 2024.
The $116 billion-to-$304 billion range is an estimate, not a count of fraud losses established in individual cases. GAO said uncertainty and limits in the available data account for the wide range. Applied to estimated federal tax liability for tax year 2022 — the latest year for which GAO had a liability estimate — the range equals about 2% to 6% of taxes owed. That comparison does not make 2022 the sole basis for the annual estimate.
The distinction between fraud and other unpaid taxes matters. In a letter included with the report, IRS chief executive officer Frank Bisignano challenged aspects of GAO’s definition, saying it could include other forms of tax noncompliance. The report’s estimate should therefore not be read as a precise accounting of proven fraud.
GAO said the estimate could help Congress and agency officials judge the scale of the risk and decide how to allocate resources. Its separate finding on the IRS response concerns coordination: The auditors called for a strategy and a designated entity to manage fraud risks across the agency.
