A review of 75,000 households across the county claiming single person discount on their council tax has identified £1.3 million being claimed incorrectly or fraudulently.
Lincolnshire authorities are getting smarter and more effective at fighting fraud.
As a result of these checks, 3,441 discounts were taken away from people who were not entitled to them, and this is now being reclaimed.
Councillor Alex Maughan, Lincolnshire County Council's Counter-Fraud Champion said: "Council tax fraud takes money away from local services, and is unfair on the vast majority of people who pay the correct bill.
"It's important that we investigate and take appropriate action against people claiming discounts and exemptions that they are not entitled to."
Enforcement action has been taken against 500 of these people as they have either failed to respond or have provided misleading information.
Since 2007, £4.7m pounds of fraud against councils has been detected, including procurement fraud, bank mandate fraud and financial mis-management.
Lucy Pledge, Head of Internal Audit and Risk Management, said: "Lincolnshire councils are working together to tackle fraud by sharing resources and information. We have a zero tolerance approach to all forms of fraud, corruption and theft.
"Over the coming months, our next focus will be on procurement fraud, financial mismanagement and identifying where business rates have not been paid."
To report any type of fraud involving a Lincolnshire council, contact the confidential hotline on Freephone 0800 0853716 or email whistleblowing@lincolnshire.gov.uk