More than 27,000 health care providers who were paid by Medicare had unpaid payroll and other federal tax debts totaling over $2 billion in 2006, according to a study by the Government Accountability Office.
The figure represents about 6 percent of all such providers. However, it could well be an understatement, according to the GAO. The $2 billion in unpaid tax debts only includes those debts reported on a tax return or assessed by the IRS through its enforcement programs. However, some of the Medicare providers owed taxes under separate tax identification numbers from the TINs that received the Medicare payments, or they did not file their tax returns.
The GAO selected 25 Medicare providers with significant tax debt for more in-depth investigation and uncovered evidence of potential crimes.
"Our investigation found abusive and potentially criminal activity, including failure to remit to IRS payroll taxes withheld from their employees," said the GAO. "Rather than fulfill their role as 'trustees' of this money and forward it to IRS as required by law, these Medicare providers diverted the money for other purposes. Willful failure to remit payroll taxes is a felony under U.S. law. Furthermore, individuals associated with some of these providers at the same time used payroll taxes withheld from employees for personal gain."
Some individuals accumulated substantial wealth and assets, said the GAO, including million-dollar houses and luxury vehicles, while failing to pay their federal taxes. In addition, some providers received Medicare payments, even though they had quality-of-care issues, such as losing track of a patient in their care who has not been found.
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