The United States could be losing between ₹9.6 lakh crore and ₹25.3 lakh crore in federal tax revenue each year because of tax fraud, according to a report attributed to the U.S. Government Accountability Office (GAO). The estimate is based on federal data and research covering the period from 2018 to 2024 and represents roughly 2% to 6% of taxes owed, according to the report.
The assessment comes amid continuing scrutiny of tax compliance, fraud prevention and the resources available to the U.S. Internal Revenue Service (IRS). GAO has separately estimated that total annual fraud losses across the broader U.S. federal government were between $233 billion and $521 billion, based on fiscal-year 2018–2022 data. That broader estimate covers federal programmes and operations and should not be treated as a tax-fraud figure.
GAO Estimate Highlights Scale of Tax Fraud
According to The420.in's report, the latest assessment combines information from confirmed and suspected fraud cases, IRS tax-gap estimates, research into transactions in the shadow economy and international comparisons. It represents an attempt to quantify the portion of tax losses specifically associated with fraudulent activity.
The wide range in the estimate reflects uncertainty surrounding the scale of undetected fraud and differences in how fraudulent activity and other forms of non-compliance are classified.
GAO has previously emphasised that fraud estimates involve uncertainty because some fraud is detected and investigated while other potential losses remain unidentified. Its established government-wide methodology uses multiple categories of detected and potential fraud and incorporates uncertainty into the resulting estimates.
IRS Questions the Definition of Fraud
The IRS has challenged aspects of the assessment, according to the report. IRS Chief Executive Officer Frank Bisignano argued that the study used a definition of fraud that was too broad and that some cases classified as fraud could instead represent ordinary tax non-compliance.
That distinction is significant because tax underpayment can result from different causes, including deliberate fraud, reporting errors, non-compliance and other circumstances. GAO itself distinguishes fraud from improper payments in its broader government work, noting that although fraudulent payments are improper, not every improper payment is caused by fraud.
The report recommends a broader anti-fraud strategy within the revenue system, including stronger organisational responsibility for fraud prevention and enforcement, according to the source article.
Tax Enforcement and Funding Remain Political Issues
The findings arrive amid continuing debate in Washington over federal spending, tax enforcement and the size of government agencies.
The source report notes that much of the data examined predates President Donald Trump's second term and subsequent changes to federal staffing. It also includes the period of the COVID-19 pandemic, when authorities uncovered major fraud schemes involving federal emergency programmes.
Separately, GAO continues to identify fraud-risk management as a significant federal-government challenge. In April 2026, the agency said federal programmes face fraud risks and noted that many of its recommendations for strengthening fraud-risk management remained open.
Technology Becomes Part of Tax Compliance Strategy
Technology is increasingly being considered as part of efforts to identify tax evasion and improve compliance. The source report says IRS leadership has emphasised the use of advanced data tools to identify suspicious activity.
However, technology alone cannot eliminate the tax gap. GAO's broader fiscal-health work says the IRS most recently estimated the U.S. tax gap at $606 billion for tax year 2022, representing the difference between taxes owed and taxes actually paid after late payments and enforcement actions.
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Tax Fraud Is Only One Part of the US Fiscal Challenge
Even eliminating tax fraud would not by itself resolve the U.S. government's broader fiscal problems. GAO's fiscal-health analysis identifies the tax gap, fraud, improper payments and the wider imbalance between federal spending and revenue as separate issues.
The debate over the latest tax-fraud estimate is therefore likely to continue, particularly around how fraud should be defined and measured. The figures cited in the report should be understood as estimates rather than a precise accounting of every dollar lost to deliberate tax fraud.