Full Breakdown
Republican Push to End Tax Breaks for OPT Workers Gains Momentum After “Phantom Employees” Reveal
5/22/2026, 4:18:43 AM
Legislative Response to OPT Fraud Allegations
In June 2024, Acting ICE Director Todd Lyons reported investigators uncovered over 10,000 foreign students linked to suspect employers in Optional Practical Training (OPT) program, many as “phantom employees”—students authorized to work but who never reported to their jobs. Rep. Glenn Grothman (R-WI) introduced the “OPT Fair Tax Act,” a House bill requiring employers to pay Social Security and Medicare taxes for OPT workers at same rate as for U.S. employees. A companion Senate proposal by Sen. Tom Cotton (R-AR) introduced in September remains pending.
Origins and Structure of the OPT Program
The OPT program lets F-1 visa holders work temporarily in jobs related to their field of study. Current law exempts wages paid to OPT participants from Social Security and Medicare payroll taxes, creating a financial incentive for employers to hire foreign students over American graduates.
Key Lawmakers and Agency Officials
Effort is led by Rep. Glenn Grothman (Wisconsin) and Sen. Tom Cotton (Arkansas). Acting ICE Director Todd Lyons oversees investigation. DOJ opened a tip line for reports of employers favoring foreign workers. Institute for Progress supplied participation data.
Program Participation and Financial Impact
Institute for Progress estimates an average of about 330,000 students participated in OPT annually from FY 2017 to 2022. The think tank projects that ending the tax exemption could generate $27-$36 billion in federal revenue over ten years.
Official Government Statements
Lyons said OPT program has “ballooned into an uncontrolled guest worker pipeline” and warned its growth has been accompanied by fraud. Grothman argued tax exemption “creates a financial incentive to hire foreign workers over Americans” and called for legislation to “restore integrity” to program. DOJ opened a tip line for reports of employers favoring foreign workers.
Verbatim Quotes
- “Americans should not be put at a disadvantage because Washington created a loophole that favors hiring foreign workers over qualified U.S. citizens.” — Glenn Grothman, U.S. Representative (Wisconsin)
- “ballooned into an uncontrolled guest worker pipeline with hundreds of thousands of foreign students working in the United States.” — Todd Lyons, Acting Director, U.S. Immigration and Customs Enforcement
- “Today, we are announcing we have identified over 10,000 foreign students who claim to be working for highly suspect employers, and that’s just among the top 25 OPT employers. This is only the tip of the iceberg,” — Todd Lyons, Acting Director, U.S. Immigration and Customs Enforcement
- “Right now, the federal government has created a financial incentive to hire foreign workers over Americans.” — Glenn Grothman, U.S. Representative (Wisconsin)
Future Legislative Steps
Grothman's bill proceeds through House committees; Cotton's Senate proposal remains pending. ICE continues its investigation, and DOJ's tip line stays open. Combined actions will determine whether payroll tax exemption for OPT participants is eliminated.
