FinCEN Issues Warning Notice to Financial Institutions Expressing Concerns SWACCA Has Consistently Raised About Payroll Fraud and Tax Evasion's Association with Misclassification in Construction
The Financial Crimes Enforcement Network (FinCEN), in coordination with the Internal Revenue Service’s Criminal Investigation Division, issued a detailed notice urging U.S. financial institutions to take extra precautions to prevent the banking system from being used to facilitate a “concerning increase in state and federal payroll tax evasion and workers’ compensation insurance fraud in the U.S. residential and commercial real estate construction industries.”
The notice echoes several points that SWACCA has consistently pressed with FinCEN. It details how “many payroll tax evasion and workers’ compensation fraud schemes involve networks of individuals and the use of shell companies and fraudulent documents.” The FinCEN notice reflects arguments SWACCA has been making to FinCEN for over three years, including in written comments SWACCA’s advocacy team submitted in March 2021, February 2022, and February 2023 about how the agency can help address payroll fraud and tax evasion through the reporting processes it is charged with overseeing and that SWACCA has been influencing for the benefit of its members and to fight misclassification in our industry.