GAO tax fraud estimate puts annual losses at up to $304B

A first-of-its-kind report by the U.S. Government Accountability Office estimates annual federal tax fraud losses at $116 billion to $304 billion and says the IRS needs a coordinated strategy to manage fraud risks.

The report, issued last week, said that tax fraud accounts for roughly 2% to 6% of taxes owed to the federal government. The IRS partially agreed with the GAO’s recommendations to develop an antifraud strategy and designate an antifraud entity but pushed back on aspects of the report’s approach.

IRS CEO Frank Bisignano said some forms of taxpayer noncompliance do not necessarily meet the legal threshold for fraud and disputed the GAO’s characterization of the agency’s fraud governance as fragmented. Read more.