Federal fraud could be costing taxpayers as much as $521 billion every year, according to a Foundation for Government Accountability report that cites a federal estimate. The staggering figure represents about 7% of everything Washington spends annually.

The report also estimates that improper payments by the federal government have totaled about $3 trillion since 2003. Much of the fraud flows through programs including Medicaid, food stamps, Medicare, the Earned Income Tax Credit and a pandemic grant for concert venues.

Liesel Crocker, the report’s author and a senior research fellow at FGA, discussed the findings in an exclusive interview with The Center Square. Crocker described a federal payment system hemorrhaging taxpayer money while reviewing only a fraction of its programs.

Crocker said, “Fraud against federal programs now runs about $521 billion a year, or 7% of everything Washington spends.” The scale is so large that only five federal agencies have bigger budgets, according to Crocker.

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The known losses may represent only part of the problem. Crocker noted that among more than 2,200 federal payment programs, only 64 are reviewed for improper payments each year.

REPORT: FEDERAL FRAUD COULD COST TAXPAYERS $521 BILLION A YEAR

A Foundation for Government Accountability report says fraud may equal 7% of federal spending—while improper payments have totaled roughly $3 TRILLION since 2003. https://t.co/0pAcnzDzk4 — Real America's Voice (RAV) (@RealAmVoice) October 7, 2026

The vulnerable programs share several recurring problems, according to Crocker. They frequently fail to double-check applicant information, turn paperwork over to state and county offices, and rapidly distribute enormous amounts of money.

“Fraud shows up where the checks are easiest to get,” Crocker said. The report’s findings suggest those easy checks are spread across some of the federal government’s largest benefit and payment operations.

FGA, a nonpartisan think tank, praised President Donald Trump’s War on Fraud and other efforts to fight fraud. Yet the organization said states and Congress still must do more to stop the losses.

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“The bottom line: Congress and states should build on President Trump’s efforts to crack down on fraud and corruption and save taxpayers billions,” the report said. That call places responsibility on officials at both the federal and state levels.

More than 8,000 fraud cases are currently being prosecuted by attorneys general across the country. Even that eye-popping total represents only a “small fraction” of the fraud being carried out, according to the report.

Crocker pointed to Minnesota as a particular concern, while the report also highlighted California, Illinois, Colorado, Maine and New York. Those states were among 21 that refused to cooperate with federal efforts to examine their food stamp programs for fraud.

The results from cooperating states offered a disturbing glimpse of the problem. In the 29 states that participated, the U.S. Department of Agriculture found 186,000 dead enrollees and 500,000 people collecting benefits in two states simultaneously.

“Food stamp trafficking is estimated to cost as much as $4.7 billion a year,” Crocker said. She added, “Every dollar that goes to someone abusing the system is a dollar taken from the truly needy.”

Despite the scale of the findings, Crocker expressed hope that federal efforts could move the government in the right direction. She argued that Washington lacked a meaningful response to rampant fraud for 20 years.

“President Trump is finally treating stealing from the taxpayer like the crime it is,” Crocker said. She also warned that the results from cooperating states raise questions about what remains hidden in states that refused to participate.

The report called for the Office of Management and Budget to encourage more agencies to conduct fraud vetting and collaborate with the Treasury Department’s Do Not Pay system. It also recommended stronger eligibility verification, evaluation of providers considered risky, and investigations into fraud allegations across federal programs.

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