Should Medical Providers Who Owe Back Taxes Continue Receiving Medicaid Funds for Their Services?
The Government Accountability Office recently began to investigate the "tax gap" found where medical providers owe over $1 Billion in back taxes, however, they continue to receive Medicaid payments for services provided to the over 55 million Medicaid participants.
The problem the IRS seems to run into in this situation is that Medicaid is a "partnership" between the federal and individual state governments, and the payments technically come from the individual states rather than the federal government. Therefore, the payments are not subject to the Federal Payment Levy Program which allows the IRS to garnish payments made by any branch of the U. S. Government to a taxpayer (which includes businesses) that is receiving payment by the U. S. Government.
It is estimated that if there was some type of levy process where the payments could be directly levied before the medical providers are paid, the IRS could have collected between $70 and $160 million last year alone.