United States Government Accountability Office

GAO Testimony 

Before the Permanent Subcommittee on 

Investigations, Committee on Homeland 

Security and Governmental Affairs, 

U.S. Senate

MEDICARE

Thousands of Medicare 

Part B Providers Abuse the 

Federal Tax System 

Statement of 

Gregory D. Kutz, Managing Director 

Forensic Audits and Special Investigations 

Steven J. Sebastian, Director 

Financial Management and Assurance 

John J. Ryan, Assistant Director 

Forensic Audits and Special Investigations 

For Release on Delivery

Expected at 2:30 p.m. EST 

Tuesday, March 20, 2007

 

GAO-07-587T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 20, 2007

MEDICARE

Thousands of Medicare Part B Providers 

Highlights of GAO-07-587T, a testimony Abuse the Federal Tax System 

before the Permanent Subcommittee on 

Investigations, Senate Committee on 

Homeland Security and Governmental 

Affairs, U.S. Senate 

Under the Medicare program, the 

Department of Health and Human

Services (HHS) and its contractors 

paid a reported $330 billion in 

Medicare benefits in calendar year

2005. Because GAO previously

identified government contractors 

with billions of dollars in unpaid 

federal taxes, the Subcommittee 

requested that we expand our work 

in this area to all Medicare

providers. This testimony

addresses Medicare physicians,

health professionals, and suppliers

for services related to senior health 

care, who received about 20 

percent of all Medicare payments. 

Because of limitations in HHS data, 

GAO was asked to determine if

Medicare Part B physicians, health 

professionals, and suppliers have 

unpaid federal taxes, and if so, to 

(1) determine the magnitude of

such debts; (2) identify examples of 

Medicare physicians and suppliers 

that have engaged in abusive, or 

potentially criminal activities; and 

(3) assess HHS efforts to prevent 

delinquent taxpayers from 

enrolling in Medicare and levy

payments to pay delinquent federal 

taxes.

To perform this work, GAO 

reviewed data from HHS and the

Internal Revenue Service (IRS). In

addition, GAO reviewed policies, 

procedures, and regulations related 

to Medicare. GAO also performed

additional investigative activities. 

We plan to report on the results of

our work related to other Medicare

providers including any needed

recommendations later this year. 

Over 21,000 of the physicians, health professionals, and suppliers (i.e., about 

5 percent of all such providers) paid under Medicare Part B during the first 9 

months of calendar year 2005 had tax debts totaling over $1 billion. This $1 

billion figure is understated because some of these Medicare health care 

providers have understated their income and/or not filed their tax returns. 

We selected 40 Medicare physicians, health professionals, and suppliers with 

high tax debt for more in-depth investigation of the extent and nature of any 

related abusive or potentially criminal activity. Our investigation found 

abusive and potentially criminal activity, including failure to remit to IRS 

individual income taxes and/or payroll taxes withheld from their employees. 

Rather than fulfill their role as “trustees” of this money and forward it to IRS, 

they diverted the money for other purposes. Willful failure to remit payroll 

taxes is a felony under U.S. law. Further, individuals associated with some of 

these providers used payroll taxes withheld from employees for personal 

gain (e.g., to purchase a new home) or to help fund their businesses. Many of 

these individuals accumulated substantial wealth and assets, including 

million-dollar houses and luxury vehicles, while failing to pay their federal 

taxes. In addition, some physicians received Medicare payments even 

though they had serious quality-of-care issues, including license reprimands 

and prior suspensions from state medical boards, revocations of hospital 

privileges, and previous exclusions from the Medicare program. 

Examples of Medicare Health Care Provider Abusive and Criminal Activity 

Type of 

business 

Unpaid tax 

debt

HHS payments 

received Description of activity 

Physician Over $600

thousand Up to $100,000 

Physician convicted of money laundering 

through use of offshore accounts.

Physician Nearly $1

million Over $100,000 

Hospital denied physician’s hospital 

privileges due to substandard care. 

Ambulance Over $5 

million Over $100,000

Owner convicted for defrauding the U.S. 

government. 

Source: GAO analysis of IRS, HHS, public, and other records. 

HHS has not issued Medicare regulations or policies requiring Medicare 

contractors to consider tax debts in making a decision about whether to 

enroll a physician, health professional, or supplier into Medicare. Further, 

HHS has not established a policy to obtain taxpayer consent to obtain tax 

information from IRS as part of its Medicare eligibility decision-making 

process. 

IRS can continuously levy up to 100 percent of each payment made to a 

federal payee—for example, a Medicare physician—until that tax debt is 

paid. However, HHS is not participating in the continuous levy program and 

thus the government has not collected unpaid taxes from Medicare 

payments. In the first 9 months of calendar year 2005, we estimate that the

government lost opportunities to collect between $50 million and $140 

million by not participating in the continuous levy program. 

www.gao.gov/cgi-bin/getrpt?GAO-07-587T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Gregory Kutz at 

(202) 512-7455 or Steve Sebastian at (202) 

512-3406. 
Mr. Chairman and Members of the Subcommittee: 

Thank you for the opportunity to discuss Medicare physicians, health 

professionals, and suppliers paid under the Supplemental Medical 

Insurance program, also know as Medicare Part B, who have abused the 

federal tax system while doing business with the federal government. This 

testimony provides the results of our most recent work related to 

identifying abusers of the federal tax system. In recent hearings held by 

this subcommittee,1

 we testified that federal contractors (Department of 

Defense, federal civilian, and General Services Administration

contractors) abused the federal tax system with little consequence. Due to

the significance of the issues raised during those hearings, you asked us to

provide additional information about whether Medicare providers who 

were paid by the government for Medicare-related services were engaged

in similar tax abuses. Because of limitations in the data provided to us by 

the Department of Health and Human Services (HHS), this testimony will

cover physicians, health professionals, and suppliers who were paid under 

Medicare Part B and engaged in tax abuses.2

 We plan to conduct a 

subsequent audit and related investigations to determine whether other 

Medicare providers, such as hospitals, durable medical equipment 

suppliers, and skilled nursing facilities, have abused the federal tax system 

 1

GAO, Financial Management: Some DOD Contractors Abuse the Federal Tax System 

with Little Consequence, GAO-04-414T (Washington, D.C.: Feb. 12, 2004); Financial

Management: Thousands of Civilian Agency Contractors Abuse the Federal Tax System 

with Little Consequence, GAO-05-683T (Washington, D.C.: June 16, 2005); and Financial

Management: Thousands of GSA Contractors Abuse the Federal Tax System, 

GAO-06-492T (Washington, D.C.: March 14, 2006).

2

For this testimony, we are defining physician, health professional, and supplier to include 

the following: (1) Physician to include medicine, doctor of osteopathy, doctor of dental 

surgery or dental medicine, doctor of podiatric medicine, or doctor of optometry, and a 

doctor of chiropractic legally authorized to practice by a state in which he/she performs 

this function. (2) Health professional to include individuals and businesses excluding

physicians who may deliver covered Medicare services if the services are incident to a 

physician’s service or if there is specific authorization in the law. They include nurse

practitioners and physician assistants, qualified clinical psychologists, clinical social 

workers, certified nurses, midwives, ambulances, and certified registered nurse 

anesthetists. (3) Supplier to include an entity that is qualified to furnish health services

covered by Medicare, other than providers, physicians, and health professionals. They

include ambulatory surgical centers, independent physical therapists, mammography

facilities, independent occupational therapists, clinical laboratories, and portable X-ray 

suppliers. For purposes of this testimony, durable medical equipment suppliers were 

excluded, but we plan to examine them in the subsequent audit.

Page 1 GAO-07-587T 
while receiving Medicare payments.3

 Any recommendations needed to

address the issues raised in this testimony will be included as part of our 

planned subsequent reporting on this area. 

The specific objectives of this audit and investigation were to determine, 

to the extent possible, if physicians, health professionals, and suppliers 

who receive Medicare Part B payments have unpaid federal taxes, and if 

so, to (1) determine the magnitude of tax debts owed; (2) identify 

examples of physicians, health professionals, and suppliers involved in

abusive or potentially criminal activities; and (3) assess HHS efforts to 

prevent delinquent taxpayers from enrolling in Medicare and levy 

Medicare payments to pay delinquent federal taxes. 

To identify the magnitude of physicians, health professionals, and 

suppliers with unpaid federal taxes, we obtained and analyzed Internal 

Revenue Service (IRS) tax debt data as of September 30, 2005, and 

obtained and analyzed the HHS database of Medicare Part B-approved 

claims paid to physicians, health professionals, and suppliers for the first 9 

months of calendar year 2005.4

 We matched the list of Medicare 

physicians, health professionals, and suppliers with IRS tax debts using 

the taxpayer identification number (TIN). To illustrate examples of abuse 

or potential criminal activity, based on our data mining, we selected 40 

Medicare physicians and suppliers for a detailed audit and investigation of 

the extent and nature of such activity. For these 40 cases, we reviewed 

copies of automated tax transcripts and other tax records (for example, 

revenue officer’s notes) and performed additional searches of criminal, 

financial, health care, and public records. For these cases, we also updated 

the tax debt amount as of September 30, 2006, to reflect any additional tax 

assessments or collections that IRS recorded as of that date. To determine 

whether HHS prevents physicians, health professionals, and suppliers who 

owe tax debts from enrolling in Medicare or levying Medicare payments to 

pay taxes, we examined the HHS regulations, policies, and procedures for 

conducting determinations in the enrollment approval process. We also

interviewed officials from HHS, two large HHS Medicare contractors, IRS, 

and the Department of Treasury’s Financial Management Service (FMS) 

 3

In addition to Medicare providers, we are also conducting a separate audit on Medicaid 

providers who have abused the federal tax system while receiving Medicaid payments. 

4

We requested the approved Medicare Part B claims to physicians, health professionals, 

and suppliers for calendar year 2005. HHS was able to provide us the first 9 months of 

calendar year 2005 claims by the end of our review. 

Page 2 GAO-07-587T 
concerning any barriers for levying Medicare payments. A more detailed

description of the scope and methodology related to our audit and 

investigative work supporting this testimony is provided in appendix I. 

We conducted our work from June 2006 through February 2007. Our audit 

work was performed in accordance with U.S. generally accepted 

government auditing standards. We performed our investigative work in 

accordance with standards prescribed by the President’s Council on 

Integrity and Efficiency.

Thousands of Medicare Part B physicians, health professionals, and 

suppliers abused the federal tax system with little consequence.5

Specifically, our analysis of data provided by HHS and IRS indicates that 

over 21,000 Medicare Part B physicians, health professionals and 

suppliers6

 had tax debts totaling over $1 billion.7 This represented about 5 

percent of the number of all Medicare Part B physicians, health 

professionals, and suppliers paid during the first 9 months of calendar year

2005. The unpaid taxes largely consisted of individual income and payroll 

taxes.8

 However, our $1 billion estimate of tax debts owed by Medicare 

Part B physicians, health professionals, and suppliers is understated 

because IRS data does not reflect all amounts owed by businesses and 

individuals. Specifically, it does not include amounts (1) owed by 

businesses and individuals that have not filed tax returns or that have 

failed to report the full amount of taxes due (referred to as nonfilers and 

underreporters) and (2) for which IRS has not determined that specific tax 

debts are owed. Further, our past audits have also indicated that IRS 

Summary 

 5

We considered activity to be abusive when a Medicare Part B physician, health 

professional or supplier’s actions or inactions, though not illegal, took advantage of the

existing tax enforcement and administration system to avoid fulfilling federal tax 

obligations and were deficient or improper when compared with behavior that a prudent

person would consider reasonable.

6

Because some Medicare Part B physicians, health professionals, and suppliers may do 

business with other federal agencies, some described in this report may also have been

included in our reports concerning Department of Defense, General Services

Administration, and civilian federal contractors that abuse the federal tax system.

7

As of September 30, 2006, we estimate that the Medicare Part B providers had over $1.3

billion in tax debts for tax year 2005 and prior years.

8

Payroll taxes are amounts that employers withheld from employees’ wages for federal 

income taxes, Social Security, and Medicare as well as the related employer matching

contributions for Social Security and Medicare taxes. Employers are responsible for 

remitting payroll taxes to IRS and are liable for any outstanding balance. 

Page 3 GAO-07-587T 
records contain coding errors that affect the accuracy of taxpayer account 

information—including erroneous exclusion of tax debt from IRS’s 

collection activities. 9

Our audits and investigations detail examples of the extent and nature of

abusive and criminal activity related to the federal tax system by 40 

Medicare Part B physicians, health professionals, and suppliers. These 40 

cases were paid by Medicare for a variety of services, including physician, 

ambulance, laboratory, and imaging services. Many were established 

businesses (such as corporations) that owed payroll taxes withheld for 

their employees. Rather than fulfill their role as “trustees” of this money 

and forward it to IRS as required by law, these physicians, health 

professionals, and suppliers diverted the money for other purposes. These 

payroll taxes included amounts withheld from employee wages for Social 

Security, Medicare, and individual income taxes.10 In one case, an 

ambulance owner paid employees in cash and did not report this income 

to the IRS. Although the ambulance owner was convicted for defrauding 

the U.S. government, the ambulance company continued to receive

Medicare payments from HHS. 

At the same time that they were not paying their federal taxes, many 

individuals associated with our 40 cases bought or owned significant 

personal assets, including commercial properties, multimillion dollar 

homes, and luxury vehicles. One physician gambled millions of dollars at 

the same time the individual owed hundreds of thousands of dollars in 

federal taxes. Further, several of the case studies involved physicians who 

were sanctioned by their state medical boards for, among other things, 

drug abuse and substandard care of their patients. 

HHS does not have policies in place to prevent physicians, health 

professionals, and suppliers who have tax debts from enrolling in and 

receiving payments from Medicare. Further, federal law generally 

prohibits IRS from disclosing taxpayer data to HHS and its contractors 

 9

GAO, Financial Management: Some DOD Contractors Abuse the Federal Tax System 

with Little Consequence, GAO-04-95 (Washington, D.C.: Feb. 12, 2004); and GAO, Internal 

Revenue Service: Procedural Changes Could Enhance Tax Collections, GAO-07-26 

(Washington, D.C.: Nov. 15, 2006). 

10Willful failure to remit payroll taxes is a criminal felony offense while the failure to 

properly segregate payroll taxes can be a criminal misdemeanor offense. 26 U.S.C. §§ 7202, 

7215 and 7512 (b). 

Page 4 GAO-07-587T 
unless the taxpayer provides consent.11 HHS has not established a policy to 

obtain Medicare applicant’s consent to obtain information from IRS to 

consider in its Medicare eligibility decision making process. Specifically, 

HHS has not developed Medicare regulations or HHS implementing policy 

to require HHS or their contractors to (1) screen physicians, health 

professionals, and suppliers for unpaid taxes and (2) require contractors 

to obtain consent for IRS disclosure of federal tax debts. As a 

consequence, HHS has no mechanism to prevent physicians, health 

professionals, and suppliers who have tax debts from enrolling in or 

receiving payments from Medicare. 

Further, HHS has not taken advantage of an available program to collect 

tax debts from physicians and other Medicare Part B providers. A 

provision of the Taxpayer Relief Act of 1997 authorizes IRS to 

continuously levy certain federal payments made to delinquent taxpayers.12

However, in the 10 years since its passage, HHS has neither participated in

the continuous levy program nor actively participated in a task force 

dedicated to improving the program’s effectiveness. Thus, no tax debt 

owed by Medicare Part B physicians, health professionals, and suppliers 

has ever been collected through the continuous levy program.13 As a result, 

we estimate that for the first 9 months of calendar year 2005 alone the 

federal government lost opportunities to collect between $50 million to 

$140 million in unpaid federal taxes because HHS has not worked with IRS 

to effectively levy Medicare payments. 

 11HHS Medicare contractors screen physicians, health professionals, and suppliers prior to 

enrollment into the Medicare program. Medicare contractors also process and pay the 

Medicare claims and are reimbursed by CMS through the Medicare Trust Fund. 

12To improve the collection of unpaid taxes, IRS is authorized to continuously levy up to

100 percent for federal payments related to goods and services. To implement this levy 

authority, IRS, in coordination with the Department of Treasury’s FMS, implemented the 

Federal Levy Payment Program (FPLP) in July 2000. The FPLP program utilizes FMS’s 

Treasury Offset Program (TOP) for the levy of federal payments.. 

13To satisfy tax debts, IRS does have the authority to legally seize property either held by 

the taxpayer or owned by the taxpayer and held by a third party. This authority includes 

the seizure of Medicare receivables held by Medicare contractors and owed to physicians, 

health professionals, and suppliers. However, IRS policy is to use the levy against 

Medicare payments for only flagrant cases. Unlike levies from the continuous levy 

program, each levy is typically a one-time seizure of property (i.e., Medicare receivables) 

held by Medicare contractors at a specific point of time and is done on a case-by-case basis

based on the particular circumstances of the case. IRS officials stated that they do not

know how much in tax levies were collected from Medicare payments. 

Page 5 GAO-07-587T 
Our analysis of 2005 data found that over 21,000 physicians, health 

professionals, and suppliers14 who received Medicare Part B payments 

during the first 9 months of 2005 had over $1 billion in unpaid federal 

taxes as of September 30, 2005.15 This represents about 5 percent of the 

number of Medicare Part B physicians, health professionals, and suppliers

paid during the first 9 months of calendar year 2005. Because the IRS 

database does not include amounts owed by taxpayers who have not filed 

tax returns and for which IRS has not assessed tax amounts due, the 

estimated amount of unpaid federal taxes is understated. 

Magnitude of Unpaid 

Taxes of Medicare 

Part B Physicians, 

Health Professionals, 

and Suppliers 

Characteristics of 

Medicare Part B 

Physicians, Health 

Professionals, and 

Suppliers’ Unpaid Federal 

Taxes

As shown in figure 1, about 91 percent of the over $1 billion in unpaid 

taxes was comprised of federal individual income and payroll taxes. The 

other 9 percent of taxes included corporate income, excise, 

unemployment, and other types of taxes. Unlike our previous reports and 

testimonies on contractors with tax debts, a larger percentage of taxes 

owed by these physicians, health professionals, and suppliers was 

comprised of federal individual income taxes, which are unpaid amounts 

that individuals owe on their personal income. These taxpayers are 

typically either sole proprietors or certain limited liability companies that 

report income through individual income tax returns.16

 14Our estimate is for Medicare Part B physicians, health professionals, and suppliers with 

tax debt applicable to the 2004 tax year and prior years as of September 30, 2005. To avoid

overestimating the amount owed by Medicare physician and physicians and related 

suppliers with unpaid tax debts and to capture only significant tax debts, we excluded (1) 

tax debts that have not been agreed to by the tax debtor or affirmed by the court, (2) tax 

debts from calendar year 2005, (3) approved Medicare claims less than $100, and (4) tax 

debts less than $100. 

15As of September 30, 2006, we estimate that Medicare Part B physicians, health 

professionals, and suppliers had over $1.3 billion in tax debts for tax years 2005 and prior 

years. 

16Sole proprietors and certain limited liability companies may file Medicare claims under 

their Social Security Numbers (SSNs). If these physicians and related suppliers had

employees, they would typically report the payroll taxes under an employer identification 

number and not their SSNs.

Page 6 GAO-07-587T 
Figure 1: Medicare Part B Physicians, Health Professionals, and Suppliers with

Unpaid Federal Taxes (by Tax Type) as of September 30, 2005 

9%

41% 50%

Source: GAO analysis of HHS and IRS data as of September 30, 2005.

Other ($93 million)

Payroll ($430 million)

Individual income ($523 million)

As shown in figure 1, Medicare Part B physicians, health professionals, 

and suppliers, which are corporations or other kinds of businesses, owed 

about $430 million in federal payroll taxes. Employers are subject to civil

and criminal penalties if they do not remit payroll taxes to the federal 

government. When an employer withholds taxes from an employee’s 

wages, the employer is deemed to have a fiduciary responsibility to hold 

these amounts “in trust” for the federal government until the employer 

makes a federal tax deposit in that amount. To the extent these withheld 

amounts are not forwarded to the federal government, the employer is 

liable for these amounts, as well as the employer’s matching Federal 

Insurance Contribution Act contributions for Social Security and 

Medicare. Individuals within the business (e.g., corporate officers) may be 

held personally liable for the withheld amounts not forwarded and 

assessed a civil monetary penalty known as a trust fund recovery penalty.17

Willful failure to remit payroll taxes can also be a criminal felony offense 

punishable by imprisonment of up to 5 years,18 while the failure to properly 

segregate payroll taxes can be a criminal misdemeanor offense punishable 

 1726 U.S.C. § 6672. 

1826 U.S.C. § 7202. 

Page 7 GAO-07-587T 
by imprisonment of up to a year.19 The law imposes no penalties upon an 

employee for the employer’s failure to remit payroll taxes since the 

employer is responsible for submitting the amounts withheld. The Social 

Security and Medicare trust funds are subsidized or made whole for 

unpaid payroll taxes by the federal government’s general fund. Thus, 

personal income taxes, corporate income taxes, and other government 

revenues not specifically designated for the trust funds are used to pay for 

these shortfalls to the Social Security and Medicare trust funds. 

A substantial amount of the unpaid federal taxes shown in IRS records as 

owed by Medicare Part B physicians, health professionals, and suppliers 

had been outstanding for several years. As reflected in figure 2, about 85 

percent of the over $1 billion in unpaid taxes were for tax periods prior to

calendar year 2004, with about 41 percent of the unpaid taxes for tax 

periods prior to calendar year 2000.

20

Figure 2: Medicare Part B Physicians, Health Professionals, and Suppliers with

Unpaid Federal Taxes (by Calendar Year) as of September 30, 2005 

14%

15%

27%

44%

Source: GAO analysis of HHS and IRS data as of September 30, 2005.

Prior to 1995 ($150 million)

2004 ($160 million)

1995 to 1999 ($285 million)

2000 to 2003 ($452 million)

 1926 U.S.C. § 7215 and 26 U.S.C. § 7512 (b). 

20A “tax period” varies by tax type. For example, the tax period for payroll and excise taxes

is generally one quarter of a year. The taxpayer is required to file quarterly returns with IRS 

for these types of taxes, although payment of the taxes occurs throughout the quarter. In 

contrast, for income, corporate, and unemployment taxes, a tax period is 1 year.

Page 8 GAO-07-587T 
Our previous work has shown that as unpaid taxes age, the likelihood of 

collecting all or a portion of the amount owed decreases.21 This is due, in 

part, to the continued accrual of interest and penalties on the outstanding 

tax debt which, over time, can dwarf the original tax obligation. The 

amount of unpaid federal taxes we have identified does not include all tax 

debts owed by physicians, health professionals, and related suppliers due 

to statutory provisions that give IRS a finite period under which it can seek 

to collect on unpaid taxes. Generally, there is a 10-year statutory collection

period beyond which IRS is prohibited from attempting to collect tax 

debt.22 Consequently, if these physicians, health professionals, and 

suppliers owe federal taxes beyond the 10-year statutory collection period, 

the older tax debt may have been removed from IRS’s records.23 We were 

unable to determine the amount of tax debt that had been removed. 

Unpaid Federal Taxes of 

Medicare Part B 

Physicians, Health 

Professionals, and 

Suppliers Is Understated 

Although over $1 billion in unpaid federal taxes owed by Medicare Part B 

physicians, health professionals, and suppliers as of September 30, 2005, is 

a significant amount, it understates the full extent of unpaid taxes owed by

these or other businesses and individuals. The IRS tax database reflects 

only the amount of unpaid federal taxes either reported by the individual 

or business on a tax return or assessed by IRS through its various 

enforcement programs. The IRS database does not reflect amounts owed 

by businesses and individuals that have not filed tax returns and for which 

IRS has not assessed tax amounts due. For example, during our audit, we 

identified instances from our case studies in which Medicare Part B 

physicians, health professionals, and suppliers failed to file tax returns for 

a particular tax period and IRS had not assessed taxes for these tax 

periods. Consequently, while these physicians, health professionals, and 

suppliers had unpaid federal taxes, they were listed in IRS records as 

having no unpaid taxes for that period. Further, our analysis did not 

attempt to account for businesses or individuals that purposely 

underreported income and were not specifically identified by IRS as owing 

 21GAO, Internal Revenue Service: Recommendations to Improve Financial and

Operational Management, GAO-01-42 (Washington D.C.: Nov. 17, 2000).

22The 10-year time may be suspended for a variety of reasons, including for periods during

which the taxpayer is involved in a collection due process appeal, litigation, or a pending

offer in compromise or installment agreement. As a result, fig. 2 includes taxes that are for 

tax periods from more than 10 years ago. 

23For example, IRS wrote off over $350,000 for one of our cases because those unpaid taxes

could no longer be collected by IRS because it reached its statutory extension period. 

Page 9 GAO-07-587T 
the additional federal taxes. According to IRS, underreporting of income 

accounted for more than 80 percent of the estimated $345 billion annual 

gross tax gap.24 Consequently, the full extent of unpaid federal taxes for 

Medicare Part B physicians, health professionals, and suppliers is not 

known. 

In addition to the IRS tax database not reflecting all assessed tax amounts 

due, our past audits have also indicated that the IRS tax database contains

coding errors that adversely affect IRS’s collection activities. IRS’s 

collection process is heavily dependent upon its automated computer 

system and the information that resides within this system. In particular, 

the codes in each taxpayer’s account in IRS’s tax database are critical to 

IRS in tracking the collection actions it has taken against a tax debtor and 

in determining what, if any, additional collection actions should be 

pursued. For example, IRS uses these codes to identify cases it should 

exclude from the continuous levy program,25 which is an automated 

method of collecting tax debt by offsetting certain federal payments made

to individuals and businesses, as well as from other collection actions. 

While we did not evaluate the appropriateness of IRS’s exclusions for this 

testimony, the exclusions are only as good as the codes IRS has entered 

into its systems. In our previous work, we found that inaccurate coding at 

times prevented IRS collection action, including referral to the continuous 

levy program.26 Specifically, in November 2006, we estimated that about 

$2.4 billion in tax debt was erroneously excluded from the continuous levy 

program as of September 30, 2005. IRS did not identify and correct the 

coding errors we found because it did not sufficiently monitor the timely 

updating of the status and transaction codes or the effect of computer 

 24According to IRS, nonfilers and underpayment of taxes comprised the rest of the gross

tax gap.

25Each week IRS sends FMS an extract of its tax debt files containing updated account 

balances of tax debts that are already in TOP, the new tax debts that need to be added to

TOP, and all taxes in TOP that need to be removed. FMS sends payment data to TOP to be

matched against these unpaid federal taxes. If there is a match and IRS has updated TOP to 

reflect that it has completed all legal notifications, the federal payment is reduced (levied) 

to help satisfy the unpaid federal taxes. In addition to federal tax debts, the TOP database

also includes federal nontax debts, state tax debts, and child support debts.

26GAO, Financial Management: Some DOD Contractors Abuse the Federal Tax System 

with Little Consequence, GAO-04-95 (Washington, D.C.: Feb. 12, 2004); and GAO, Internal 

Revenue Service: Procedural Changes Could Enhance Tax Collection, GAO-07-26 

(Washington, D.C.: Nov. 15, 2006). 

Page 10 GAO-07-587T 
programming changes. In addition, we found that the design of IRS’s 

policies for monitoring the status of financial hardship cases was not 

sufficient to ensure the ongoing accuracy of such designations.

27

Therefore, effective management of these codes is critical because if these

codes are not accurately or appropriately updated to reflect changing 

circumstances, cases may be needlessly excluded from collection action, 

including the continuous levy program. 

For all 40 cases involving Medicare Part B physicians, health professionals, 

and suppliers with outstanding tax debt that we audited and investigated,

we found abusive and/or potentially criminal activity related to the federal

tax system.28 Of these cases, 25 involved physicians, health professionals, 

and suppliers that had unpaid payroll taxes dating as far back as the early

1990s. Rather than fulfill their role as “trustees” of this money and forward 

it to IRS as required by law, these physicians, health professionals, and 

suppliers diverted the money for other purposes. IRS had trust fund 

recovery penalties in effect for 16 of the 25 business cases at the time of 

our review. In addition, as discussed previously, willful failure to remit 

payroll taxes can be a criminal felony offense punishable by imprisonment 

up to 5 years,29 while the failure to properly segregate payroll taxes can be 

a criminal misdemeanor offense punishable by imprisonment of up to a 

year.30 The other 15 cases involved individuals who had unpaid individual 

income taxes dating as far back as the 1970s. 

Examples of Medicare 

Part B Physicians, 

Health Professionals, 

and Suppliers 

Involved in Abusive 

and Potentially 

Criminal Activity 

Related to the Federal 

Tax System

 27IRS grants tax debtors experiencing financial difficulty a hardship designation that

excludes them from the continuous levy program and other tax collection activities until 

their income increases. To measure this, IRS solely uses the income reported on the tax

debtor’s annual tax returns. However, IRS does not monitor those tax debtors to ensure

they are filing and paying current taxes. As we reported last year, for 31 financial hardship 

cases we examined, 24 had ceased to file tax returns. 

28For all cases, we performed searches of criminal, financial, tax, and public records to

determine whether the physicians and suppliers are involved in other related entities. For 

each related entity, we determined whether that entity had Medicare payments for the first 

9 months of calendar year 2005 and had unpaid federal taxes as of September 30, 2005. In

instances where we identified related parties with both Medicare Part B payments and tax 

debts, we defined a case study to include those related entities, and reported on the 

combined unpaid taxes and combined Medicare Part B payments for the original 

individual/business and all the related entities.

2926 U.S.C. § 7202. 

3026 U.S.C. § 7215 and 26 U.S.C. § 7512 (b). 

Page 11 GAO-07-587T 
Our review of selected Medicare Part B physicians, health professionals, 

and suppliers revealed significant challenges that IRS faces in its 

enforcement of tax laws, a continuing high-risk area for IRS.31 Although the 

nation’s tax system is built upon voluntary compliance, when businesses 

and individuals fail to pay voluntarily, IRS has a number of enforcement 

tools, including the use of levies, to compel compliance or elicit payment.

Our review of the 40 physicians, health professionals, and suppliers found 

that IRS attempts to work with the businesses and individuals to achieve 

voluntary compliance, pursuing enforcement actions later rather than 

earlier in the collection process. Our review of IRS records with respect to

our 40 cases showed that IRS did not issue paper levies to the Medicare 

contractors to levy the payments of physicians, health professionals, and 

suppliers for 28 of our 40 cases. As a result, most of the physicians, health

professionals, and suppliers in our case studies continued to receive

Medicare Part B payments while owing their federal taxes. 

Our investigations revealed that, despite owing substantial amounts of 

federal taxes to the IRS, some physicians, health professionals, and 

suppliers had substantial personal assets—including multimillion dollar 

homes and luxury cars. For example, one physician purchased a house for 

over $1 million while his business owed over $1 million in federal taxes. 

Another physician purchased a luxury vehicle, paid for partly with cash, 

and gambled millions of dollars while owing over $400,000 in taxes. 

In addition to failure to pay taxes, our investigations also revealed that 

several physicians associated with our case studies received Medicare Part 

B payments even though they had significant problems related to the 

practice of medicine. Six physicians had been previously excluded from 

the Medicare program for such things as professional incompetence, 

financial misconduct involving a government-operated program, and 

failure to pay health education loans. Further, 13 physicians in our cases 

had also been sanctioned by their state medical boards for such things as

substandard care of their patients, drug abuse, abusive prescription 

writing, unprofessional conduct, lack of moral character, income tax 

evasion, embezzlement, aiding and abetting unlicensed practice, and

illegible patient records.

Table 1 highlights 15 of the 40 cases of Medicare physicians, health 

professionals, and suppliers with unpaid taxes. Appendix II provides 

 31GAO, High Risk Series: An Update, GAO-07-310 (Washington, D.C.: Jan. 2007). 

Page 12 GAO-07-587T 
details on the other 25 cases we examined. We are referring all 40 cases 

we examined to IRS for further collection activity and criminal 

investigation, if warranted. 

Table 1: Summary Information on Unpaid Federal Taxes and Abusive and Criminal Activity Related to 15 Medicare Part B 

Physicians, Health Professionals, and Suppliers 

Case 

Nature of

work / type

of entity 

Medicare Part B 

paid claims for 

first 9 months of 

calendar 2005a

Unpaid 

federal taxb Description of activity 

Case 1 Physician / 

Individual 

Over $100,000 Nearly $1 

million

• Physician has not made any federal tax payments since the early 

2000s. 

• Hospital denied physician’s hospital privileges due to substandard 

care. 

• State medical board investigated physician for disciplinary action. 

• HHS IG had previously excluded physician from Medicare program. 

• Physician delinquent on child support. 

• In 2 recent years, physician reported to IRS over $300,000 and 

$100,000 in net profit for the business. 

• Physician did not submit claims to Medicare contractor, sometimes for 

months at a time, to avoid IRS levies. 

• IRS reported tax debts to TOP for collection action. 

Case 2 Physician / 

Individual 

Up to $100,000 Over 

$600,000 

• IRS generated tax returns for the physician for the late 1990s and 

early 2000s because the physician did not file them. Physician did not 

make any tax payments for those tax years. 

• Physician convicted of money laundering through offshore accounts. 

• Physician owns a related business that owes over $300,000 in taxes. 

• Physician recently submitted compromise offer to IRS for less than 

one half of individual income taxes owed. 

• Physician delinquent on child support for tens of thousands of dollars. 

• HHS IG had previously excluded physician from Medicare program. 

Case 3 Ambulance 

/ Business

Over $1 million Nearly $11 

million

• IRS assessed trust fund recovery penalty against an officer of the 

business. 

• Business officer owns several luxury vehicles. 

• State Medicaid Fraud Unit investigating business. 

• Law enforcement seized cash from business. 

• Business received thousands of dollars from another federal agency 

over a 2-year period. 

• IRS reported tax debts to TOP for collection action. 

Page 13 GAO-07-587T 
Case 

Nature of

work / type

of entity 

Medicare Part B 

paid claims for 

first 9 months of 

calendar 2005a

Unpaid 

federal taxb

Description of activity 

Case 4 Ambulance 

/ Business

Over $100,000 Over $5 

million

• Owner convicted of defrauding the U.S. government. 

• Owner paid employees in cash and did not report their income to IRS.

• Business partially paid payroll taxes while owner was in prison. 

Business owner stated that the business officer used company funds, 

in part, for a party. IRS assessed trust fund recovery penalty on 

business officer. 

• IRS established repayment agreement in 2004 with business for over 

$3,000 per month with possibility of increasing payment in the future. 

• Owner owes nearly $600,000 in individual income taxes. 

Case 5 Imaging / 

Business

Over $1 million Nearly $3

million

• Tax debt is primarily unpaid payroll taxes. 

• Business entered into installment agreement of about $6,000 a month 

but subsequently defaulted for failure to pay federal tax deposits. 

• Government agency fined business over $1 million for substandard

work. 

• Business lost over $200,000 in adjudicated medical malpractice 

claim. 

• IRS recently issued a tax refund for tens of thousands of dollars to the 

owner. IRS subsequently filed a trust fund recovery penalty against 

the owner, thus missing an opportunity to offset the refund payment. 

Case 6 Physician / 

Individual 

Over $100,000 Over $1 

million

• Physician generally has history of not paying all taxes owed since the 

early 1990s. 

• In the early 2000s, physician made compromise offer of over 

$200,000 but the offer was lost by IRS in the review process. 

Physician submitted revised offer. No decision was made on the 

compromise offers by IRS. 

• Physician has not filed an individual income tax return or paid any 

taxes since early 2000s. 

• Over $100,000 of the tax debt owed by the physician reached its

statutory collection expiration period and can no longer be collected 

by IRS. 

• State medical board reprimanded physician.

Case 7 Physician / 

Individual 

Over $100,000 Over $2 

million

• Physician’s tax debts are comprised of individual income tax debt and 

trust fund recovery penalty from another business. 

• Physician has extensive history of not filing individual income tax 

returns or payroll tax returns from another business on time. 

• Physician offered installment agreement of over $10,000 per month 

but was rejected by IRS for his failure to disclose accounts

receivables. 

• Owner owns two other businesses that owe over $1 million in unpaid 

federal taxes. 

• State medical board sanctioned physician. 

Page 14 GAO-07-587T 
Case 

Nature of

work / type

of entity 

Medicare Part B 

paid claims for 

first 9 months of 

calendar 2005a

Unpaid 

federal taxb

Description of activity 

Case 8 Physician / 

Individual 

Up to $100,000 Over 

$400,000

• Physician entered into installment agreement of about $10,000 a

month but subsequently defaulted. 

• HHS IG had previously excluded physician from Medicare program. 

• State medical board placed physician’s license on probation. 

• Physician made multiple large cash deposits totaling tens of 

thousands of dollars. Many of these transactions were structured to 

avoid mandatory IRS reporting. 

• Owner recently purchased a luxury vehicle paid, in part, by a large 

cash transaction. 

• At the same time the physician was not paying taxes, the physician 

made millions of dollars in gambling transactions. 

• Physician reported about $500,000 and over $100,000 in net profit for 

his physician business in 2 recent years. 

• Physician delinquent on child support for tens of thousands of dollars. 

• IRS reported tax debts to TOP for collection action. 

Case 9 Physician / 

Individual 

Up to $100,000 Over 

$400,000

• IRS suspended collection action on physician for financial hardship. 

• Hospital revoked physician’s clinical privileges for substandard care.

• HHS IG had previously excluded physician from Medicare.

• Business owes over $150,000 to another federal agency. 

Case 10 Physician / 

Business

Over $100,000 Nearly 

$400,000

• Owner convicted for filing fraudulent tax returns. Owner used 

business accounts to pay for personal expenses. 

• Owner attempted to transfer large amounts of money to a country 

known for state-sponsored terrorism at same time the business owed 

taxes. 

• Owner owns multiple real properties, including a multimillion dollar 

home. 

• Owner’s recent reported income was about $500,000. 

• Owner closed business and paid IRS the asset value of business, 

which was hundreds of thousands of dollars less than taxes owed. 

IRS listed business as defunct. Owner started virtually identical 

business to get a new start. 

• IRS reported tax debts to TOP for collection action. 

Page 15 GAO-07-587T 
Case 

Nature of

work / type

of entity 

Medicare Part B 

paid claims for 

first 9 months of 

calendar 2005a

Unpaid 

federal taxb

Description of activity 

Case 11 Ambulance/ 

Business

Over $1 million Nearly $2 

million

• Business owns several ambulance companies owing tax debts, 

mostly payroll taxes. 

• Business officer decided to “grow the business” instead of paying 

federal taxes. 

• Business received over $100,000 from another federal agency over a

2-year period. 

• Business obtained contract for disaster relief efforts. 

• Business officer possesses multiple real properties, including house 

on a golf course and luxury vehicles, while owing taxes. 

• Company filed for bankruptcy in the 2000s. 

• IRS assessed trust fund recovery penalty against an officer of the 

business. 

• IRS reported tax debts to TOP for collection action. 

Case 12 Physician / 

Business

Up to $100,000 Nearly 

$400,000

• Owner owes over $400,000 in individual income taxes. 

• Owner owns an expensive house, liquor establishment, and a plane 

while owing taxes. 

• IRS has not assessed trust fund recovery penalty for the payroll tax 

debts because owner owes large individual income taxes liabilities

that would make the collection of trust fund recovery penalty unlikely. 

• IRS reported tax debts to TOP for collection action. 

Case 13 Physician / 

Business

Over $100,000 Nearly $2 

million

• Tax debt is primarily unpaid payroll taxes. 

• Business entered into installment agreement of about $20,000 a

month but subsequently defaulted. 

• IRS assessed trust fund recovery penalty against owner. IRS

erroneously placed the account in taxpayer claim status for about 9 

months suspending certain collection activities. During this time, the 

owner was able to purchase a house for over $1 million and receive a

tax refund on his personal taxes for thousands of dollars. 

• Owner receives income from a tobacco farm. 

• Physician lost over $1 million in adjudicated medical malpractice 

claims. 

Case 14 Physician / 

Business

Up to $100,000 Nearly $1 

million

• Tax debt is primarily unpaid payroll taxes. 

• Business has history of entering into installment agreements with IRS

and defaulting on those agreements. 

• Owner transferred properties worth over $2 million to his spouse while 

IRS was pursuing collection efforts. 

• Owner leases luxury car while owing taxes. 

• IRS has not assessed trust fund recovery penalty for the payroll tax 

debts because business is a sole proprietor and, thus, owner is

personally liable for the payroll taxes. 

• IRS reported tax debts to TOP for collection action. 

Page 16 GAO-07-587T 
Case 

Nature of

work / type

of entity 

Medicare Part B 

paid claims for 

first 9 months of 

calendar 2005a

Unpaid 

federal taxb

Description of activity 

Case 15 Physician / 

Business

Over $1 million Over $1 

million

• Tax debt is primarily unpaid payroll taxes. 

• Owner recently submitted compromise offer to IRS for about one 

fourth of taxes owed to be paid over 2 years. The amount to be paid

would cover the trust fund recovery penalty assessed on the business

owner. 

• Owner’s recent reported income was about $500,000. 

• Owner owns million dollar house, a pleasure boat, and several night 

clubs while owing taxes. 

Source: GAO’s analysis of IRS, FMS, Medicare claims, public, and other records. 

Notes: Dollar amounts are rounded. A Medicare physician, health professional, or supplier can submit

claims using either an Employer Identification Number (EIN) or Social Security Number (SSN). In our 

testimony, any entity submitting a claim with an EIN is referred to as a business, and any entity 

submitting a claim with an SSN is referred to as an individual. 

a

Medicare Part B payments are physician, health professional, and supplier claims approved by HHS

for payment for the first 9 months of calendar year 2005. 

b

Unpaid tax amount as of September 30, 2006. 

The following provides detailed information on three of the cases we 

examined. 

• Case 1: Although in 2 recent years, the physician’s business reported a net 

income of over $300,000 and $100,000, respectively, the physician has not 

made any federal tax payments to IRS. In addition, the physician has been

delinquent in child support during this time. As a result, the physician’s 

spouse had to sell the residence because the spouse could not afford the 

house. A hospital revoked the physician’s hospital privileges for 

substandard care and the state medical board also investigated the 

physician. The physician received over $100,000 in Medicare Part B 

payments for the first 9 months of calendar year 2005. 

• Case 2: A physician was convicted of money laundering through offshore 

accounts. In addition to owing over $600,000 in federal individual income 

taxes, the physician owes tens of thousands of dollars in delinquent child

support and also owns a related business that owes over $300,000 in

federal taxes. Even though owing significant debts, the physician owns 

several residential properties, including an overseas house. HHS paid the 

physician nearly $100,000 in Medicare Part B payments during the first 9 

months of calendar year 2005. 

• Case 4: An ambulance business owner paid employees in cash and did not 

report this income to IRS. The ambulance business owner was convicted 

and incarcerated for defrauding the U.S. government. While the owner was 

in prison, a business officer used company funds to purchase property for 

Page 17 GAO-07-587T 
the business officer instead of paying the federal payroll taxes to IRS. In 

2004, the business negotiated and is paying on a repayment agreement of 

about $3,000 per month. These monthly payments are substantially less 

than the interest that would accrue on the debt. HHS paid the ambulance

company over $100,000 in Medicare Part B payments during the first 9 

months of calendar year 2005. 

HHS does not prevent physicians, health professionals, and suppliers with 

tax debts from enrolling in or receiving payments from the Medicare 

program. HHS has not developed Medicare regulations or HHS 

implementing policy to require HHS or their contractors to (1) screen 

physicians, health professionals, and suppliers for unpaid taxes and (2) 

require contractors to obtain consent for IRS disclosure of federal tax

debts. However, because HHS has not participated in the continuous levy 

program, no tax debts owed by these physicians, health professionals and 

suppliers are being collected through the program. As a result, the federal 

government lost opportunities to collect between $50 million and $140 

million in unpaid taxes in the first 9 months of calendar year 2005.32

HHS Medicare contractors are responsible for screening physicians, health 

professionals, and suppliers prior to enrollment into the Medicare 

program. However, as part of the screening process, neither HHS policies 

nor HHS regulations require Medicare contractors to consider tax debts or

tax-related abuses of prospective physicians, health professionals, and 

suppliers. Medicare contractors are also not required to conduct any 

criminal background checks on these individuals. Medicare contractors 

are required to review the HHS Office of Inspector General (OIG) 

exclusion list and the General Services Administration (GSA) debarment 

lists; however, these lists do not include all individuals or businesses who 

have abused the federal tax system.33 The basis of exclusion of certain 

individuals and entities from participation in Medicare programs is made 

Physicians, Health 

Professionals, and 

Suppliers with Unpaid

Taxes Are Not 

Prohibited from

Enrolling or Receiving 

Payments from 

Medicare 

 32The $50 million estimate is based on 15 percent rate that FMS uses to levy civilian 

contractors. The $140 million estimate is based on the 100 percent rate authorized by law. 

33The OIG exclusion list provides information on health care providers that are excluded 

from participation in Medicare, Medicaid, and other federal health care programs because

of criminal convictions related to Medicare or state health programs or other major

problems related to health care (e.g., patient abuse or neglect). The GSA debarment list 

provides information on individuals or entities that are debarred, suspended, or otherwise 

excluded from participating in any other federal procurement or nonprocurement activity. 

Federal agencies can place individuals or entities on the GSA debarment list for a variety of 

reasons including fraud, theft, bribery, and tax evasion. 

Page 18 GAO-07-587T 
by statute.34 The statute provides for both mandatory and permissive 

exclusions. Mandatory exclusions are confined to health-related criminal 

offenses while permissive exclusions concern primarily non-health-related

offenses. The Federal Acquisition Regulation cites conviction of tax 

evasion as one of the causes for debarment; indictment on tax evasion 

charges is cited as a cause for suspension. Consequently, the deliberate 

failure to remit taxes, in particular payroll taxes, while a felony offense, 

will likely not result in an individual or business being debarred or 

suspended unless there is an indictment or conviction of the crime. 

Moreover, while a felony offense, the deliberate failure to remit taxes, in 

particular payroll taxes, will likely not result in an individual or entity 

being placed on the Medicare exclusion or GSA debarment lists unless the 

taxpayer is convicted. 

Even if an individual or entity is convicted of tax evasion or other taxrelated crime, the individual or business still may not be placed on the 

Medicare exclusion or GSA debarment lists. To be placed on these lists, 

federal agencies must identify those individuals and businesses and 

provide them with due process. As part of the due process, the agency

must make a determination as to whether the exclusion or debarment is in 

the government’s interest. None of the 40 cases that we investigated, 

including those involving a conviction for tax-related crimes, are currently

on the Medicare exclusion or GSA debarment lists. 

Further complicating HHS decision making on the consideration of tax 

debts for Medicare, federal law does not permit IRS to disclose taxpayer 

information, including tax debts, to HHS or Medicare contractor officials 

unless the taxpayer consents.35 HHS has not established a policy to obtain 

Medicare applicants’ consent to obtain tax information from IRS to 

consider in its Medicare eligibility decision making process. Thus, certain

tax debt information can only be discovered from public records if IRS 

files a federal tax lien against the property of a tax debtor36 or a record of 

conviction for tax offense is publicly available.37 Consequently, HHS 

 3442 U.S.C. § 1320a-7. 

3526 U.S.C. § 6103. 

36For example, 8 of the 40 cases for which we performed detailed audit and investigation 

did not have federal tax liens filed against them. See app. III for federal and state tax liens 

by each case. 

37Under section 6321 of the Internal Revenue Code, IRS has the authority to file a lien upon 

all property and rights to property, whether real or personal, of a delinquent taxpayer. 

Page 19 GAO-07-587T 
officials and their contractors do not have ready access to information on 

unpaid tax debts to consider in making decisions on physicians, health 

professionals and suppliers. 

Further, HHS has not established policy to participate in the IRS 

continuous levy program, thus preventing IRS from capturing at least a 

portion of the Medicare payments made to physicians, health

professionals, and suppliers that owe tax debts. As stated earlier, federal 

law allows IRS to continuously levy federal vendor payments up to 100 

percent until the tax debt is paid.38 IRS has implemented this authority by 

creating a continuous levy program that utilizes FMS’s Treasury Offset 

Program system. In July 2001, we reported that HHS did not have plans to 

participate in the continuous levy program and we recommended that the 

Commissioners of IRS and FMS work with HHS to develop plans to 

include Medicare payments in the continuous levy program.39 In July 2006, 

IRS began to pursue HHS participation in the continuous levy program 

through the Federal Contractor Tax Compliance (FCTC) Task Force, a 

multiagency group dedicated to improving the continuous levy process.40

In response to IRS’s request, HHS began to participate in the FCTC Task 

Force meetings in February 2007. 

If HHS had previously worked with IRS to levy Medicare Part B payments, 

we estimate, using the conservative 15 percent rate that FMS uses to levy 

 38Of the 40 cases that we performed detailed review, IRS reported 16 of them for 

continuous levy. 

39GAO, Tax Administration: Millions of Dollars Could Be Collected If IRS Levied More 

Federal Payments, GAO-01-711 (Washington, D.C.: July 20, 2001). 

40To address issues raised by our February 12, 2004, report and testimony, this multiagency 

task force was established to help improve the continuous levy program. The task force

includes representatives from the Department of Defense (DOD), Defense Finance and 

Accounting Service, IRS, FMS, General Services Administration, Office of Management and

Budget, and Department of Justice. As a result of the actions undertaken by the task force, 

IRS reported collecting millions in taxes through the improvements in the continuous levy 

program.

Page 20 GAO-07-587T 
civilian contractors,41 the federal government could have collected about 

$50 million in unpaid federal taxes for the first 9 months of calendar year

2005. Using the 100 percent rate authorized by law, the federal government 

could have collected approximately $140 million. These estimates were 

based on debt information IRS has reported to TOP as of September 30, 

2005. 

Thousands of Medicare Part B physicians, health professionals, and 

suppliers have failed in their responsibility to pay federal taxes they owe 

as individuals and businesses residing and conducting business in this 

nation. Further our case studies demonstrate that physicians and other 

medical service providers with federal tax debts can receive Medicare Part 

B payments while engaging in abusive and potentially criminal activity. In 

addition, our case studies determined that some physicians who abused 

the federal tax system are also not providing quality care to all of their 

patients. Additionally, because HHS has failed to participate in the 

continuous levy process since its authorization in 1997, the federal 

government has missed the opportunity to collect hundreds of millions of 

dollars in unpaid taxes from Medicare Part B physicians, health 

professionals, and suppliers. The federal government cannot afford to 

leave millions of dollars in taxes uncollected each year in the current 

environment of federal deficits, nor can it continue to permit physicians, 

health professionals, and suppliers that have abused the federal tax system

from participating in the Medicare program. 

Concluding 

Comments 

 41In October 2004, Congress passed the American Jobs Creation Act 2004, Pub. L.108-357, 

118 Stat 1418 codified as amended in scattered sections of 26 U.S.C., to increase the 

maximum continuous levy from 15 percent to up to 100 percent of payments to contractors

with unpaid taxes. The act specifically increased the continuous levy on payments to 

vendors for “goods and services” sold or leased to the government. According to IRS, the

legal language, which specified that goods and services be subject to the 100 percent levy 

provision, excludes real estate, such as rent payments, from the new levy requirement.

Because civilian agencies’ payment systems cannot separately identify real estate 

transactions from other contractor payments, FMS could not implement the new law for 

civilian payments and continues to levy payments at 15 percent.

Page 21 GAO-07-587T 
Mr. Chairman and Members of the Subcommittee, this concludes our 

statement. We would be pleased to answer any questions that you or other 

members of the committee may have at this time. 

For further information about this testimony, please contact Gregory Kutz 

at (202) 512-7455 or kutzg@gao.gov or Steve Sebastian at (202) 512-3406 or

sebastians@gao.gov. Contacts points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this 

testimony. 

GAO Contacts 

Page 22 GAO-07-587T 
Page 23 GAO-07-587T 

Appendix I: Scope and Methodology 

To identify the magnitude of unpaid taxes owed by Medicare Part B 

physicians, health professionals and suppliers, we requested from 

Department of Health and Human Services (HHS) the related Medicare 

Part B claims data for calendar year 2005.

1

 HHS was only able to provide 

us these data for the first 9 months of calendar year 2005 by the end of our

review. We also obtained and analyzed the Internal Revenue Service (IRS) 

unpaid assessment data as of September 30, 2005. We matched the 

Medicare claim data to the IRS unpaid assessment data using the taxpayer

identification number (TIN) field. To avoid overestimating the amount 

owed by Medicare Part B physicians, health professionals, and suppliers 

with unpaid tax debts and to capture only significant tax debts, we 

excluded from our analysis tax debts and paid claims meeting specific 

criteria to establish a minimum threshold in the amount of tax debt and in

the amount of paid claims to be considered when determining whether a 

tax debt is significant. The criteria we used to exclude tax debts are as 

follows: 

• tax debts that IRS classified as compliance assessments or memo accounts 

for financial reporting,2

• tax debts from calendar year 2005 tax periods, and 

• Medicare Part B physicians, health professionals, and suppliers with total 

unpaid taxes and Medicare Part B paid claims of less than $100. 

The criteria above were used to exclude tax debts that might be under 

dispute or generally duplicative or invalid, and tax debts that are recently 

incurred. Specifically, compliance assessments or memo accounts were 

excluded because these taxes have neither been agreed to by the 

taxpayers nor affirmed by the court, or these taxes could be invalid or 

duplicative of other taxes already reported. We excluded tax debts from 

calendar year 2005 tax periods to eliminate tax debt that may involve

matters that are routinely resolved between the taxpayer and IRS, with the 

taxes paid or abated within the current year. We further excluded tax 

debts and Medicare Part B paid claims of less than $100 because they are

insignificant for the purpose of determining the extent of taxes owed. 

 1

Physician claim data consists of all Part B claims processed for physicians, health 

professionals, and suppliers by Medicare contractors excluding durable medical 

equipment. As such, durable medical equipment will be reviewed in the subsequent audit.

2

Under federal accounting standards, unpaid assessments require taxpayer or court 

agreement to be considered federal taxes receivables. Compliance assessments and memo 

accounts are not considered federal taxes receivable because they are not agreed to by

taxpayers or the courts. 
To identify examples of abuse or potentially criminal activity, we selected 

40 Medicare Part B physicians, health professionals, and suppliers with 

federal tax debts for detailed audit and investigation. The 40 cases were 

chosen using a nonrepresentative selection approach based on our 

judgment, data mining, and a number of other criteria. Specifically, we 

narrowed the 40 cases with unpaid taxes based on the amount of unpaid 

taxes, number of unpaid tax periods, amount of payments reported by 

Medicare Part B, and indications that owner(s) might be involved in 

multiple companies with tax debts. 

We obtained copies of automated tax transcripts and other tax records 

(for example, revenue officer’s notes and certain individual tax returns) 

from IRS, and reviewed these records to exclude physicians and suppliers 

that had recently paid off their unpaid tax balances and considered other 

factors before reducing our number of case studies to 40. We performed 

additional searches of criminal, financial, and public records. In cases 

where record searches and IRS tax transcripts indicate that the owners or 

officers of a business are involved in other related entities3

 that have 

unpaid federal taxes, we also reviewed records of the related entities and 

the owner(s) or officer(s), in addition to the original business we 

identified. For each related entity, we determined whether that entity had

Medicare Part B payments for the first 9 months of calendar year 2005 and 

had unpaid federal taxes as of September 30, 2005. We updated the tax

debt amount as of September 30, 2006, to reflect any additional tax 

assessments or collections that have occurred. In instances where we 

identified related parties that had both Medicare Part B payments and tax

debts, our case studies included those related entities, combining unpaid

taxes and combined Medicare Part B payments for the original

individual/business as well as all related entities. 

To determine the extent to which HHS officials and their contractors are 

required to consider tax debts or other criminal activities in the enrollment 

of physicians, health professionals, and suppliers into Medicare, we 

examined Medicare regulations and HHS policies and procedures for 

enrollment. We also discussed policies and procedures used to enroll 

physicians, health professionals, and suppliers into Medicare with officials 

from two Medicare contractors. As part of these discussions, we inquired 

whether HHS and their contractors specifically consider tax debts or 

 3

We define related entities as entities that share common owner(s) or officer(s), a common

TIN, or a common address.

Page 24 GAO-07-587T 
perform background investigations to determine whether prospective 

physicians, health professionals, and suppliers are qualified before their 

enrollment to Medicare is granted. 

To determine the extent to which HHS levies Medicare Part B payments to 

physicians, health professionals, and suppliers owing tax debts, we 

examined the statutory and regulatory authorities that govern the 

continuous levy program to determine whether any legal barriers exist. We 

also interviewed officials from HHS, two Medicare contractors, IRS, and 

Department of Treasury’s Financial Management Service (FMS) officials 

as to any operational impediments for the continuous levy of provider 

payments to pay federal tax debts. 

To determine the potential levy collections on the first 9 months of 

calendar year 2005, we used 15 percent and 100 percent of the total paid 

claim or total tax debt amount reported to TOP per IRS records, 

whichever is less. To be conservative, we used the 15 percent rate that 

FMS uses to levy civilian contractors. A gap will exist between what could 

be collected and the maximum levy amount calculated because (1) tax 

debts in TOP may not be eligible for immediate levy because IRS has not 

completed due process notifications, and (2) IRS may remove tax debts 

from the levy program because the taxpayer filed for bankruptcy, 

negotiated an installment agreement, or some other action which made the 

taxpayer ineligible for the levy program. 

To determine the reliability of the IRS unpaid assessments data, we relied

on the work we performed during our annual audits of IRS’s financial 

statements. While our financial statement audits have identified some data 

reliability problems associated with the coding of some of the fields in 

IRS’s tax records, including errors and delays in recording taxpayer 

information and payments, we determined that the data were sufficiently 

reliable to address this report’s objectives. Our financial audit procedures, 

including the reconciliation of the value of unpaid taxes recorded in IRS’s 

masterfile to IRS’s general ledger, identified no material differences. 

For HHS’s Medicare claims history and FMS’s TOP databases, we 

interviewed HHS and FMS officials responsible for their respective 

databases. In addition, we performed electronic testing of specific data 

elements in the databases that we used to perform our work. 

Data Reliability 

Assessment 

Page 25 GAO-07-587T 
Based on our discussions with agency officials, review of agency 

documents, and our own testing, we concluded that the data elements 

used for this testimony were sufficiently reliable for our purposes. 

We conducted our audit work from June 2006 through February 2007 in 

accordance with U.S. generally accepted government auditing standards, 

and we performed our investigative work in accordance with standards 

prescribed by the President’s Council on Integrity and Efficiency. 

Page 26 GAO-07-587T 
Page 27 GAO-07-587T 

Appendix II: Medicare Physicians, Health 

Professionals, and Suppliers with Unpaid 

Taxes

This appendix presents summary information on the abusive or potentially

criminal activity associated with 25 of our 40 case studies.1

 Table 2 

summarizes the abuse or potentially criminal activity related to the federal

tax system for these 25 physicians, health professionals, and suppliers that 

also received Medicare Part B payments in 2005. The cases involving 

businesses primarily involved unpaid payroll taxes. 

Table 2: Summary Information on Other Medicare Part B Physicians, Health Professionals and Suppliers with Unpaid Federal 

Taxes 

Case 

Nature of

work / type

of entity 

Medicare Part B 

paid claims for 

first 9 months of 

calendar 2005a

Unpaid 

federal

 taxb

Description of activity 

Case 16 Medical 

Imaging / 

Business

Up to $100,000 Nearly 

$900,000

• Tax debt is primarily unpaid payroll taxes covering over 15 tax 

periods. For most of these tax periods, business made no tax 

payments. 

• IRS assessed trust fund recovery penalty against the owner of the 

business. 

• Business filed for bankruptcy in 2000s. 

• State agency investigated and closed business for negligent services.

• IRS reported tax debts to TOP for collection action. 

Case 17 Physician / 

Individual 

Up to $100,000 Over 

$100,000

• Tax debt is individual income tax debt owed from the mid 2000s. 

• IRS recently levied over $200,000 in investments that paid off 

individual income taxes owed from the late 1990s to the early 2000s. 

• State medical board suspended physician’s license. 

• Physician filed for bankruptcy in 2000s. 

Case 18 Physician / 

Individual 

Up to $100,000 Over 

$400,000

• Physician has not filed tax returns to the IRS since late 1990s. 

• State medical board reprimanded physician.

• HHS IG had previously excluded physician from Medicare program. 

Case 19 Physician / 

Individual 

Over $100,000 Over 

$400,000

• Physician’s tax debt is largely comprised of individual income taxes

owed for tax years in the 1990s. 

• HHS IG had previously excluded physician from Medicare program. 

• State medical board suspended physician’s license. 

• Physician owes over $100,000 to another federal agency. 

 1

Table 1 in the main portion of this testimony provides data on 15 detailed cases.
Case 

Nature of

work / type

of entity 

Medicare Part B 

paid claims for 

first 9 months of 

calendar 2005a

Unpaid 

federal

 taxb

Description of activity 

Case 20 Physician / 

Individual 

Up to $100,000 Over $3

million

• Physician has generally refused to pay federal income taxes since 

1970s. 

• Physician is a tax protester. 

• Physician attempted to convey residential property to children to 

prevent foreclosure by IRS. 

• Over $350,000 of tax debt owed by the physician reached its statutory 

collection expiration period and can no longer be collected by IRS. 

• Physician owes over $1 million to another federal agency. 

Case 21 Physician / 

Individual 

Up to $100,000 Nearly 

$900,000

• Physician offered installment agreement of about $1,000 a month. 

• Physician did not make federal income tax payments for several 

years in 2000s. 

• State medical board suspended physician’s license. 

• Physician was convicted of income tax evasion. 

Case 22 Ambulance 

/ Business

Over $100,000 Nearly 

$700,000

• Business offered installment agreement of about $20,000 a month but 

was rejected by IRS because taxpayer did not stay current with either 

making required payroll tax deposits or filing required payroll tax 

returns. 

• Business officer admitted to using tax money for another business. 

• IRS is investigating business for abusing filing requirements. 

• IRS is in the process of assessing trust fund recovery penalty for the 

payroll tax debts. 

Case 23 Physician / 

Individual 

Over $100,000 Nearly $3

million

• IRS revenue officer noted that taxpayer used compromise offers to 

delay collection efforts. 

• State medical board suspended physician’s license. 

• Physician is under investigation for illegally transferring assets so that 

IRS cannot seize them. 

• IRS reported tax debts to TOP for collection action. 

Case 24 Physician / 

Individual 

Over $100,000 Over $1 

million

• Physician’s tax debt is largely comprised of individual income taxes

owed for tax years in the 1990s. Physician also owes a trust fund 

recovery penalty for over $100,000. 

• Physician stated that he did not pay taxes because of purchase of 

businesses and payment of children’s college education. 

• Physician owns house near a country club worth over $500,000 while 

owing taxes. 

• Physician’s recent reported income was over $500,000. 

• IRS reported tax debts to TOP for collection action. 

Page 28 GAO-07-587T 
Case 

Nature of

work / type

of entity 

Medicare Part B 

paid claims for 

first 9 months of 

calendar 2005a

Unpaid 

federal

 taxb

Description of activity 

Case 25 Physician / 

Business

Over $100,000 Over $2 

million

• Tax debt is primarily unpaid payroll taxes. 

• Owner claimed that taxes were not paid because Medicare and 

Medicaid were slow in paying claims. 

• Owner owns multimillion dollar house, as well as paintings, antiques, 

and other collectibles worth hundreds of thousands of dollars while 

business owed taxes. 

• Owner recently closed business and started a new company. At about 

the same time, the business owner paid over $1 million in trust fund 

recovery penalty payments to pay off the personal assessment. 

However, even with these payments, business still owes over $2 

million in unpaid taxes. 

Case 26 Ambulance/ 

Business

Over $1 million Nearly $2 

million

• Tax debt is primarily unpaid payroll taxes. 

• Business has generally not made any federal tax deposits since mid2000s. Owner stated that tax returns were not filed because owner 

did not have the money to pay payroll taxes. 

• Multiple federal and state tax liens totaling nearly $2 million filed 

against the business. 

• Business received thousands of dollars from another federal agency 

over a 2-year period. 

• IRS is in the process of assessing trust fund recovery penalty for the 

payroll tax debts. 

• IRS reported tax debts to TOP for collection action. 

Case 27 Physician / 

Business

Over $100,000 Over $1 

million

• Tax debt is primarily unpaid payroll taxes. 

• Owner owes over $600,000 in individual income taxes. 

• IRS classified account as a financial hardship. 

• Owner owns $2 million dollar house. 

• Owner made large cash withdrawals totaling hundreds of thousands

of dollars during the time little or no payroll taxes were paid to IRS. 

• State medical board sanctioned physician. 

• IRS has not assessed trust fund recovery penalty for the payroll tax 

debts because business is a sole proprietor and thus is personally 

liable for the payroll taxes. 

Case 28 Ambulance 

/ Business

Over $100,000 Over $1 

million

• Tax debt is primarily unpaid payroll taxes. 

• Business under court order to pay IRS tens of thousands per month. 

• Owner owns another business that owes over $400,000 in payroll 

taxes. 

• IRS assessed trust fund recovery penalty against the owner of the 

business. 

• Business obtained contract for disaster relief efforts. 

• Owner stated that taxes were not paid because of higher gasoline 

prices and insurance. 

Page 29 GAO-07-587T 
Case 

Nature of

work / type

of entity 

Medicare Part B 

paid claims for 

first 9 months of 

calendar 2005a

Unpaid 

federal

 taxb

Description of activity 

Case 29 Physician / 

Business

Over $100,000 Over $1 

million

• Tax debt is primarily unpaid payroll taxes. 

• IRS assessed trust fund recovery penalty against the owner of the 

business. 

• Hospital suspended physician’s clinical privileges for substandard 

care. 

• State medical board sanctioned owner. 

Case 30 Physician / 

Business

Over $100,000 Over $1 

million

• Tax debt is unpaid payroll taxes. 

• Business made no tax payments since early 2000s and has not filed a

tax return since mid-2000s. 

• Owner owns about $900,000 in real property. 

• IRS has not performed assessment for trust fund recovery penalty 

related to payroll tax debts. 

• IRS reported tax debts to TOP for collection action. 

Case 31 Physician / 

Business

Over $100,000 Over $1 

million

• Tax debt is primarily unpaid payroll taxes. 

• IRS assessed trust fund recovery penalty against the owner of the 

business. 

• IRS filed federal tax liens totaling nearly $1 million against the 

business. 

• Owner owns a million-dollar house and luxury car while owing taxes. 

• Physician delinquent on student loans for tens of thousands of 

dollars. 

Case 32 Physician / 

Business

Over $100,000 Over $900 

thousand

• Tax debt is primarily unpaid payroll taxes, with business only making 

one tax payment since the early 2000s. 

• IRS assessed trust fund recovery penalties against owner for this

business and several other businesses totaling over $1 million. 

• Owner received about $90,000 in interest payments in one year from 

a company he owned that also owed federal taxes. 

• Owner owns several partnerships involved in medical services and 

land properties. 

• Physician served on the Board of Directors of a publicly held 

company. 

• IRS went to court to enforce summons order against business owner. 

• Owner was investigated for check fraud. 

Page 30 GAO-07-587T 
Case 

Nature of

work / type

of entity 

Medicare Part B 

paid claims for 

first 9 months of 

calendar 2005a

Unpaid 

federal

 taxb

Description of activity 

Case 33 Physician / 

Business

Over $100,000 Over 

$300,000

• Tax debt is primarily unpaid payroll taxes. 

• Business sought to establish installment agreement with IRS for taxes

owed but was rejected because business was not current of tax 

deposits. 

• Owner claims taxes were not paid when business lost health 

contracts after hiring a noncertified doctor. 

• Owner owns several real estate properties worth nearly $4 million 

including residence worth over $1.5 million. 

• IRS assessed trust fund recovery penalty against owner for the 

payroll tax debts. 

• IRS reported tax debts to TOP for collection action. 

Case 34 Physician / 

Business

Over $100,000 Nearly 

$800,000

• Business recently established installment agreement with IRS for 

taxes owed and agreed to future increases. 

• Owner was convicted of obtaining controlled substances by means of 

deception. 

• IRS is in process of assessing trust fund recovery penalty for the 

payroll tax debts. 

Case 35 Physician / 

Individual 

Over $100,000 Over $2 

million

• Physician was convicted of tax evasion after transferring funds

overseas. 

• Physician lost over $500,000 in adjudicated medical malpractice 

claims. 

Case 36 Physician / 

Individual 

Over $100,000 Over $1 

million

• Physician offered to compromise the debt for over $200,000 in 2004 

but was rejected by IRS. 

• Physician reported individual annual income to IRS for over $250,000 

in mid-2000s. 

• Physician owns residence worth over $800,000 while owing taxes. 

• IRS reported tax debts to TOP for collection action. 

Case 37 Physician / 

Business

Over $100,000 Over 

$600,000

• Tax debt is primarily unpaid payroll taxes. 

• Owner owns other multiple business entities owing approximately 

$500,000 in federal taxes. Owner also personally owes over $1 

million in individual income taxes. 

• IRS went to court to enforce summons order against business owner. 

• State medical board sanctioned owner. 

• IRS assessed trust fund recovery penalty against the owner of the 

business. 

• IRS reported tax debts to TOP for collection action. 

Case 38 Physician / 

Business

Up to $100,000 Over 

$200,000

• Tax debt is primarily unpaid payroll taxes. 

• IRS assessed trust fund recovery penalty against business owner. 

• State medical board sanctioned owner. 

• Both the business and the owner filed for bankruptcy in the 2000s. 

Page 31 GAO-07-587T 
Case 

Nature of

work / type

of entity 

Medicare Part B 

paid claims for 

first 9 months of 

calendar 2005a

Unpaid 

federal

 taxb

Description of activity 

Case 39 Medical 

Laboratory/ 

Business

Over $100,000 Over 

$600,000

• Tax debt is primarily unpaid payroll taxes. 

• Business owner possesses multiple real properties, as well as several 

luxury vehicles and boats while business owed taxes. 

• Business owner received multiple tax refunds in 2000s totaling tens of 

thousands of dollars because no trust fund recovery penalty was

assessed against owner. In addition, business owner received $1 

million dollar cash settlement. 

Case 40 Physician/ 

Business

Over $100,000 Over 

$800,000

• Tax debt is primarily unpaid payroll taxes. For several tax periods, 

business made no tax payments. 

• Owner owns multiple real properties, including residence, worth over 

$500,000 while owing taxes. 

• Owner lost over $250,000 in adjudicated medical malpractice claim. 

• IRS plans to assess trust fund recovery penalty for the payroll tax 

debts if the business does not fully repay tax debts. 

• IRS reported tax debts to TOP for collection action. 

Source: GAO’s analysis of IRS, FMS, HHS, public, and other records. 

Notes: Dollar amounts are rounded. A Medicare physician, health professional, or supplier can submit

claims using either an Employer Identification Number (EIN) or Social Security Number (SSN). In our 

testimony, any entity submitting a claim with an EIN is referred to as a business, and any entity 

submitting a claim with an SSN is referred to as an individual. 

a

Medicare Part B payments are physician, health professional, and supplier claims approved by HHS

for payment for the first 9 months in calendar year 2005. 

b

Unpaid tax amount as of September 30, 2006. 

Page 32 GAO-07-587T 
Page 33 GAO-07-587T 

This appendix summarizes the extent to which Medicare physicians, 

health professionals, and suppliers have federal or state liens filed against 

their property. As discussed previously, certain tax debt information can 

only be discovered from public records, such as credit reports, if IRS files 

a federal tax lien against the property of a tax debtor. Of the 40 cases, 31 

had federal tax liens filed by the Internal Revenue Service and 23 had tax 

liens filed by the states. Table 3 provides a summary of the federal or state 

tax liens filed for all 40 cases. 

Table 3: Summary of Federal and State Tax Liens Against Medicare Part B 

Physicians, Health Professionals, and Suppliers with Unpaid Taxes 

Case study Federal tax lien? State tax lien?

1 Yes No 

2 Yes No 

3 Yes Yes

4 Yes Yes

5 No No 

6 Yes No 

7 Yes No 

8 Yes No 

9 Yes Yes

10 No No 

11 No No 

12 Yes Yes

13 Yes Yes

14 Yes Yes

15 No Yes

16 Yes No 

17 Yes No 

18 Yes No 

19 Yes No 

20 Yes Yes

21 Yes Yes

22 No No 

23 Yes No 

24 Yes Yes

25 Yes Yes

26 Yes Yes

Appendix III: Medicare Physicians, Health 

Professionals, and Suppliers With Federal 

and State Tax Liens 
Case study Federal tax lien? State tax lien?

27 Yes Yes

28 Yes Yes

29 Yes Yes

30 No Yes

31 Yes Yes

32 Yes Yes

33 Yes Yes

34 No Yes

35 No Yes

36 Yes No 

37 Yes Yes

38 Yes Yes

39 Yes No 

40 Yes No 

Source: Public records. 

Page 34 GAO-07-587T (192187) 
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To

have GAO e-mail you a list of newly posted products every afternoon, go 

to www.gao.gov and select “Subscribe to Updates.” 

The first copy of each printed report is free. Additional copies are $2 each. 

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to: 

U.S. Government Accountability Office 

441 G Street NW, Room LM 

Washington, D.C. 20548 

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548 

Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548 

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Mail or Phone 

To Report Fraud,

Waste, and Abuse in 

Federal Programs 

Congressional 

Relations 

Public Affairs 

PRINTED ON RECYCLED PAPER