- The G-A-O estimated annual federal tax fraud losses of one hundred sixteen to three hundred four billion dollars for tax year twenty twenty-two.
- The estimated losses equal seventeen to forty-three percent of the six hundred ninety-six-billion-dollar gross tax gap.
- The watchdog urged the I-R-S to create an agency-wide antifraud strategy and assign an entity to coordinate oversight.
The Government Accountability Office (GAO) estimated annual federal tax fraud losses at $116 billion to $304 billion, a range equal to about 2% to 6% of estimated tax liability for tax year 2022. The agency posted the estimate September 25, 2026, in report GAO-26-107810.
The analysis draws on data and information from 2018 through 2024. The report applies the range to 2022, the latest year for which the Internal Revenue Service had projected total tax liability.
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The estimate spans a wide interval. Its high end exceeds $300 billion a year, a potential drain on federal receipts.
The report presents the range as an estimate, not a confirmed annual tally. Its calculations combine several kinds of evidence.
The estimate combines case data, the tax gap and shadow-economy evasion
The calculation incorporates fraud identified through IRS cases, potential fraud, fraud within the tax gap, and tax evasion in the shadow economy. Those are the three strands the agency used to assemble its estimate.
The analysis also used a Monte Carlo simulation. The report does not present the resulting span as a precise count.
Instead, the agency calls the figure its best estimate, based on available evidence and analytical methods. It says uncertainty is built into the methodology.
Fraud measurement carries inherent uncertainty and data limitations. Those limits accompany the categories included in the calculation, rather than yielding a single point estimate.
The work is the first comprehensive federal estimate of tax fraud losses. Its recommendations address how the IRS manages fraud risk.
The range reaches 43% of the gross tax gap at its upper end
The agency compared the estimate with the $696 billion gross tax gap. On that basis, the fraud range amounts to 17% to 43% of the gap.
The report also calculates the range as 2% to 6% of estimated tax liability. Those percentages use separate comparison measures: projected liability and the gross tax gap.
The comparison gives another measure of the range’s scale. It does not replace the estimate or remove uncertainty from the calculation.
The watchdog wants the IRS to set a strategy and assign oversight
The report says the IRS lacks an agency-wide antifraud strategy. It recommends that the agency develop and document one, then designate an entity to coordinate and oversee fraud risk management.
That proposed structure pairs an agency-wide plan with a designated coordinating body. One recommendation addresses strategy; the other assigns oversight.
The proposals would organize fraud-risk work across the agency. They give the IRS an administrative response alongside the estimate.
At the upper end, the annual figure exceeds $300 billion. The estimate is still a range, reflecting the uncertainty involved in measuring fraud.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
