Tax scofflaws still get Medicare funds

[jg]

From http://news.yahoo.com/s/ap/20070320/ap_ ... ck_taxes_1

Tax scofflaws still get Medicare funds By KEVIN FREKING, Associated Press Writer
Mon Mar 19, 10:08 PM ET



Doctors and other health care providers who owe the federal Treasury more than $1 billion in back taxes are still receiving government checks for treating Medicare patients.

In one case, a doctor received nearly $100,000 in Medicare payments during the first nine months of 2005 despite a $600,000 overdue tax bill. The doctor owned several homes, including one overseas.

Another physician gambled millions of dollars and purchased a luxury car — while defaulting on an installment agreement with the IRS that required monthly payments of $10,000. Medicare paid that physician about $100,000 in 2005.

In all, congressional auditors estimate that more than 21,000 physicians and other health care providers are abusing the federal tax system. The taxes that went unpaid for just the first nine months of 2005 exceeded $1 billion, and investigators believe that estimate to be a conservative one.

Lawmakers want the Health and Human Services Department to participate in a payment system that would allow the government to garnish a percentage of the Medicare reimbursements going to tax scofflaws.

"What you see are cases of folks who are really living the good life," said Sen. Norm Coleman (news, bio, voting record), R-Minn. "These are not folks who are scraping by, and somehow, just by timing, they can't meet their obligations."

In recent years, the Senate Committee on Homeland Security and Governmental Affairs has investigated an array of contractors who benefited from government payments even as they declined to pay federal taxes.

Now, the committee, in particular its Permanent Subcommittee on Investigations, is focusing on the health care system. It asked the Government Accountability Office to determine if physicians and other health care providers have unpaid federal taxes and, if so, to determine the magnitude of the problem.

"Our investigation found abusive and potentially criminal activity," the GAO's investigators are expected to tell the subcommittee on Tuesday. "Many of these individuals accumulated substantial wealth and assets, including million-dollar houses and luxury vehicles, while failing to pay their federal taxes." A copy of their testimony was provided to reporters Monday afternoon.

Investigators highlighted 40 cases that they found to be the most egregious. They did not identify any of the doctors, nor would they even say whether the providers were male or female, or list states of residence. However, investigators said they were referring all 40 of the cases to the IRS for criminal investigation.

The GAO noted that there is a program available that would allow Medicare to garnish some of the taxes owed when it reimburses providers for their work. A provision in a 1997 law authorizes the IRS to "levy certain payments made to delinquent taxpayers." But, Medicare officials have neither participated in the levy program nor participated in a task force dedicated to improving the program, the auditors said.

As a result, auditors estimated that the federal government lost the opportunity to collect between $50 million and $140 million in unpaid taxes during the first nine months of 2005...

[Quixote]

I think GAO is wrong in thinking that Health and Human Services would initiate garnishment of medicare payments to doctors who owe taxes. Medicare would have no idea which doctors owed until IRS told them. Based on this bit from the IRM, it appears that HHS wouldn't even be consulted in the matter. The levy would be served on FMS, the agency within Treasury that writes the checks. The list of federal payments that IRS is currently levying on does not seem to include medicare payments.

5.11.7.2.1.1 (01-01-2006)
Interagency Agreement
The interagency agreement between the IRS and FMS provides for certain Federal payments disbursed or administered by FMS to be systemically levied. FMS is the levy source for all levies issued through the FPLP — not the Federal payment agencies. Currently, the following payments are included in the FPLP:


TYPE OF FEDERAL PAYMENT
Civil Service retirement annuities administered by the Office of Personnel Management (OPM - Civil Service Retirement System and Federal Employee Retirement System). Paid by SSN

Contractor/vendor (non-military/Defense) payments.

Employee travel payments (advances and reimbursements).

Employee salaries administered by the USDA National Finance Center (NFC); Interior's National Business Center (NBC); See Exhibit 5.11.7-1.NFC and NBC Agencies; United States Postal Service (USPS).

Social Security benefit payments under Title II of the Social Security Act, (aka) Federal Old Age, Survivors and Disability Insurance (OASDI) benefits, exceptdependent child benefits; claims for lump sum payments; Prouty recipient benefits for those over 72 years old in 1971. Paid by SSN. (Supplement Security Income (SSI) will not be levied.)

Military/Defense Department (DoD) contractor/vendor payments paid through the Defense Finance and Accounting Service (DFAS); DFAS has as many as 20 payment systems/sites and each had been implemented at different times.

Miscellaneous Payments, non-means tested, such as discretionary payments and expenditures, etc.