Treasury Highlights $2.5 Billion in Payroll Tax Fraud Linked to Illegal Employment Schemes

On June 12, 2026, Treasury Secretary Scott Bessent told a gathering of Texas bankers in Houston that U.S. financial institutions had filed more than $2.5 billion in suspicious activity reports (SARs) tied to payroll-tax fraud schemes during calendar year 2025.

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Bessent linked the SAR surge to unlawful employment practices that exploit labor brokers, shell companies, and stolen identities. He said the schemes let transnational criminal groups divert payroll taxes, depress wages, and harm legitimate businesses. He also tied the problem to years of unchecked illegal immigration, which he said creates a fertile environment for such crimes.

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Treasury data indicate that, in 2025 alone, more than $2.5 billion in activity was flagged as suspicious. The reports encompass a range of illicit tactics, including payroll-tax evasion, the use of shell corporations to conceal employer identities, and the manipulation of identity-theft victims to file false employment-tax returns.

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Bessent highlighted a new Treasury and FinCEN advisory that lists warning signs of unlawful employment schemes. The guidance clarifies that banks need not act as immigration officers but should use existing due-diligence to spot and report suspicious patterns. He also announced updated FinCEN protocols for faster information sharing and tighter coordination with the White House Task Force to Eliminate Fraud, led by Vice President JD Vance. Bessent noted that community banks often detect emerging risks before they surface in national data.

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The Treasury frames payroll-tax fraud as a national-security issue because lost tax revenue shrinks federal resources and illicit proceeds fund criminal groups. The schemes also depress wages for legitimate workers and raise compliance costs for businesses. Targeting the financial channels that enable these crimes aims to protect the tax base and the broader economy.

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• “In 2025 alone, financial institutions reported more than $2.5 billion in suspicious activity associated with payroll tax fraud schemes,” — Scott Bessent, Treasury Secretary

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• “These schemes hurt law-abiding businesses, depress wages, steal taxpayer dollars, facilitate identity theft, and create opportunities for transnational criminal organizations to generate and move illicit proceeds.” — Scott Bessent, Treasury Secretary

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• “Texas remains on the front lines of the challenges created by years of unchecked illegal immigration under the Biden Administration,” — Scott Bessent, Treasury Secretary

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• “It asks banks to do what they do best: know their customers, identify risk, recognize suspicious patterns, and report illicit activity when they see it.” — Scott Bessent, Treasury Secretary

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Bessent said the Treasury will refine the FinCEN advisory, expand outreach to regional banks, and monitor its effect on SAR filings. He added that additional inter-agency collaboration could target the financial networks behind illegal employment and payroll-tax fraud.

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