Senator asks IRS to report on contractors’ unpaid taxes

Top Republican on Finance Committee wants figures on delinquent Medicare and Medicaid health care providers.

A day after a report released by the Internal Revenue Service showed that federal workers owe more than $3 billion in taxes from 2008, the ranking member of the Senate Finance Committee has asked the agency to turn its attention on contractors, specifically those working within Medicare and Medicaid programs.

According to Sen. Charles Grassley, R-Iowa, the Government Accountability Office previously has reported that health care contractors, specifically physicians, health professionals and suppliers paid under Medicare Part B, owe more than $1 billion in unpaid taxes annually, including payroll taxes used to fund Medicare and Medicaid.

A June 2008 report from the watchdog agency found that more than 27,000 Medicare providers paid in 2006 owed more than $2 billion in federal taxes. In March 2007, GAO testified that more than 21,000 Medicare Part B contractors paid during the first nine months of 2005 had tax debts exceeding $1 billion.

Grassley also cited several GAO investigations during the last three years of 90 health care providers with high tax debts. The watchdog agency reported that many of the Medicare and Medicaid providers were businesses owing payroll taxes for their employees.

In a Dec. 14 letter to IRS Commissioner Douglas Shulman, Grassley quoted GAO, saying many of the health care contractors had "accumulated substantial wealth and assets, including million-dollar houses and luxury vehicles, while failing to pay their fair share of federal taxes."

"It's not right for a few to shirk their obligations, and it's especially offensive that these tax delinquencies come from federal employees and contractors," Grassley said.

In the letter, Grassley asks Shulman what the agency is doing to collect these taxes and to coordinate enforcement efforts with the Centers for Medicare and Medicaid Services.

"Because of the seriousness of the abuses of the 90 health care providers identified by GAO, I would like a detailed description of all collection activities and other actions taken by the IRS subsequent to the GAO referral," Grassley said.

The IRS did not respond to a request for comment in time for publication.