WASHINGTON, Sept. 29 (Nationwide Times) — The federal government loses an estimated $116 billion to $304 billion a year to tax fraud, but the IRS has no antifraud strategy or designated office to coordinate its response, according to a Government Accountability Office report released Sept. 25, 2026.
GAO recommended that the IRS develop a strategy and assign an entity to coordinate fraud-risk management. The IRS partially agreed with both recommendations, according to its response included in the report. The recommendations remained open when the report was published.
The loss range is an estimate, not a count of fraud cases or a tally of money the IRS has identified for recovery. GAO drew on data and information from 2018 through 2024. Its calculation considered IRS cases involving fraud or potential fraud, potential fraud within the gap between taxes owed and taxes paid, and tax evasion tied to economic activity deliberately hidden from the government. GAO said limits in the data and uncertainty about how much noncompliance was fraudulent account for the wide range.
To put the estimate in context, GAO compared it with estimated federal tax liability for tax year 2022, the latest year for which that figure was available. The annual fraud range would equal roughly 2% to 6% of that liability. The comparison does not mean GAO measured all the estimated losses in 2022; its estimate uses information spanning several years.
The finding about IRS management is separate from the dollar estimate. GAO found that the agency had not established an overall antifraud strategy or named an entity responsible for coordinating its fraud-risk work. The report does not establish how much of the estimated loss a strategy would prevent.
IRS chief executive officer Frank Bisignano challenged aspects of GAO’s definition of fraud in a letter included with the report, saying it could include other forms of tax noncompliance. That objection bears on how the estimate should be read: GAO’s range includes potential fraud, not only conduct established as fraud.
GAO said the estimate could help Congress and agency officials judge the scale of the problem and make decisions about resources for fraud-risk management. Its two recommendations to the IRS address how the agency organizes that work, rather than setting a target for recovered revenue.
