GAO finds up to $304 billion lost annually to tax fraud, IRS lacks strategy
A GAO report estimates the United States loses between $116 billion and $304 billion each year to tax fraud and says the IRS has no agency-wide antifraud plan.
The Government Accountability Office released a study that puts yearly tax-fraud losses between $116 billion and $304 billion, roughly 2-6% of the nation’s $4.6 trillion true tax liability. The estimate draws on IRS records from 2018 through 2024 and includes both gaps in the tax system and evasion in the shadow economy. GAO concluded the IRS lacks an agency-wide antifraud strategy, with each division handling fraud mitigation independently and no single office overseeing the effort.
It urged the Treasury to require the IRS to draft a comprehensive strategy and to designate a coordinating entity. The IRS responded that it will continue documenting work through existing programs and that the Chief Tax Compliance Officer already fulfills coordination duties, but it has not committed to a formal agency-wide plan. The report also highlighted a high-profile fraud case involving Carl Delano Torjagbo, who obtained a $3.3 million refund and was sentenced to over 14 years in prison. GAO noted the IRS’s Return Review Program blocked about $88 billion in fraudulent refunds from 2018-2024, but overall fraud losses remain substantial.
Why it matters
Tax-fraud losses of up to $304 billion could fund vital services, yet the IRS lacks a unified plan to curb them.
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