GAO Report Estimates Annual Tax Fraud Up to $304 Billion

The Government Accountability Office released a report Friday estimating that the United States loses between $116 billion and $304 billion annually to federal tax fraud. Based on data from 2018 through 2024, the watchdog agency determined that these losses represent approximately 2% to 6% of all taxes owed. To combat this, the GAO recommended that the Internal Revenue Service establish a dedicated coordination entity and a formal anti-fraud strategy.

Internal Revenue Service CEO Frank Bisignano disputed the findings, arguing that the GAO utilized an overly broad definition of fraud that likely conflates common noncompliance issues with intentional fraud.

The report has triggered a political divide over agency funding and management. Representative Richard Neal argued that Republican funding cuts to the IRS have exacerbated the fraud problem. Conversely, the Tax Foundation noted that while increased funding could theoretically boost revenue, the IRS has a poor track record regarding internal reform and the updating of its information technology systems.