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Medicaid and Medicare disburse over $1 trillion in benefits per year, representing a massive portion of the $2.7 trillion that goes into healthcare-related spending in the U.S. each year. On top of that, the bureaucratic system that determines who receives those benefits (and how much) has grown increasingly complex over the years: next year, Medicare alone will have nearly 140,000 different codes doctors must choose from to describe their patients' injuries if they want to make a claim through that program. The massive amount of money in the system, combined with the complicated and often difficult-to-enforce regulatory checks in place, makes it a target for those looking to rip off taxpayers for their own monetary gain.
The estimated cost of healthcare fraud for taxpayers? $272 billion.
A recent article in The Economist makes note of some of the ways fraudsters can take advantage of the system, including overbilling for treatments and partnering with doctors and pharmacies to obtain, and then resell, prescription drugs for profit. Federal investigators report that incidences of healthcare fraud have increased by four times over the past five years. The problem takes significant resources to fight, but with fraud so rampant and lucrative, doing so can yield significant savings for taxpayers: the Department of Health and Human Services reported earlier this year that over the past three years, enforcement teams have recovered $8 for every $1 they spend to investigate fraud. Last year, the government recovered $4 billion, which is just a fraction of the total amount lost to fraud but represented a record-high success rate.
Still, the high cost of health care fraud illustrates the dangers that overly-complicated entitlement programs can pose to taxpayers -- they are easy targets for thieves looking to take advantage of a system that offers millions of transactions to hide behind every day.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today's Taxpayer News!
How are business owners prepping for Obamacare’s new 3.8% investment tax? The Wall Street Journal examines why ducking it won’t be easy.
Tax reform is stirring in New Mexico. Legislators are examining the gross receipts tax many feel is broken. But will the end result increase the tax burden?
Exposing wasteful spending is a big risk for federal employees. Read here to find out what happened to this particular whistleblower!
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What if you received a notice from the IRS stating that your tax refund had been revoked because your parents owed the government money decades ago? That's exactly what's happening to some Americans thanks to a provision included in the 2008 Farm Bill. NTUF's Research and Outreach Manager Dan Barrett wrote about this troubling trend on the Government Bytes blog last week, and outlined an alternative the IRS should consider if it needs to collect more revenue: pursue the $3.3 billion in back taxes owed by government employees themselves.
NTUF also featured 3 recently-scored bills in this week's edition of The Taxpayer's Tab:
For more on these bill's and Dan's blog post, check out the latest edition of The Taxpayer's Tab online.0 Comments | Post a Comment | Sign up for NTU Action Alerts
NTU Vice President Brandon Arnold stops in to discuss the DoJ's potentially extra-legal efforts to hamper businesses the Obama administration does not like. Pete has an update on the World Taxpayers' Conference, plus the news, NTUF's Michael Tasselmyer highlights a bill to get kids outdoors (with your money); and the Outrage of the Week!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Exposing wasteful spending is costly work and Kevin Downing, a former economist and data collector at the Department of Labor, is paying the price. In 1999 Mr. Downing raised a red flag over a project to re-organize the New York City Bureau of Labor Statistics office, including an expensive and superfluous complex in Mountainside New Jersey. Upon reporting what appeared to him as an obvious example of pork-barrel spending, Mr. Downing was immediately terminated from his position and his whistleblowing was made public knowledge on the Internet, resulting in damage to his career prospects. Employers continue to regularly cancel interviews.
On behalf of Mr. Downing, Representative Bill Pascrell, Jr. of the 8th District in New Jersey wrote a letter to the Department of Labor in hopes of highlighting his plight and protecting him from reprisals. Congressman Pascrell wrote:
“There is evidence to indicate that Mr. Downing’s termination was inappropriate because it was in retaliation for his communication with Congressional staff regarding what he believed to be waste and abuse resent in the Bureau of Labor Statistics.”
Incredibly, Pascrell’s efforts were initially ignored and eventually dismissed by the Department of Labor entirely. Allegedly, the Labor Department managers used Kevin as an example to warn union officials and employees of inevitable retaliation against future whistleblowers.
Given the circumstances, Mr. Downing’s job termination would at least raise some legitimate questions. Many in Congress would seem to agree as they recently passed the Whistleblower Protection Enhancement Act (WPEA) to attempt to protect federal employees in situations similar to Downing’s. Nonetheless, it was not passed in time to affect his specific case.
After over six years of costly legal battles, it was confirmed Kevin’s termination was a direct result of whistleblowing but the Federal Circuit Court of Appeals rejected his case because Kevin “did not disclose non-frivolous information.”
For Kevin Downing, the personal and financial consequences of exposing wasteful governmental spending have been devastating.
On the bright side, his case has brought more attention to the whistleblower issue. A Petition to re-instate Downing with all promotions, pay and benefits as well as payment of his legal expenses has been initiated on change.org for concerned taxpayers (including, of course, readers of this blog) who wish to express their solidarity.
If upstanding federal employees who risk their professional reputations to bring light to malfeasance are driven out of their positions without fair hearing or recourse, taxpayers stand to lose an important watchdog against waste – but worse, the growing mistrust in government would likely spread even further.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Congressional Report Exposes "Operation Choke Point"
Last week, the House Oversight and Government Reform Committee released a scathing report that blew the lid off a little-known initiative of the U.S. Department of Justice (DOJ) informally known as “Operation Choke Point.” In theory, the initiative purports to protect consumers from unscrupulous financial institutions. In practice, it inappropriately – and perhaps illegally – targets legal businesses that are viewed unfavorably by the Obama Administration. It has focused particular attention on the so-called payday lending industry, which it broadly labels as “a fraudulent ‘scam.’”
While short-term lending receives the harshest treatment from Operation Choke Point, it is far from the only type of business affected. In order to hamstring payday lenders, the DOJ has pressured banks and other financial institutions to avoid interacting with these legal and legitimate establishments.
From the Committee’s report:
In a statement to the House Committee on Financial Services, a trade group of licensed money service businesses and lenders submitted recent account termination letters in which the bank explicitly attributed the termination to Operation Choke Point.
Even worse, it appears that DOJ has dubious legal authority to implement the initiative. The Department states that the statutory justification for Operation Choke Point is established by Section 951 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. However, the Committee report notes that:
The intent of Section 951 was to give the Department the tools to pursue civil penalties against entities that commit fraud against banks, not private companies doing legal business. Documents produced to the Committee demonstrate the Department has radically and unjustifiably expanded its Section 951 authority.
In light of DOJ’s aggressive and possibly illegal actions against legal businesses, the Committee is unequivocal in its rebuke of the initiative; concluding that “it is necessary to disavow and dismantle Operation Choke Point.”
Needless to say, taxpayers should be very concerned about the use of public funds for this initiative.0 Comments | Post a Comment | Sign up for NTU Action Alerts
IRS Targets the Long Departed for Peanuts, Ignores the Living for Billions
If you didn’t like the 2008 Farm Bill before, get ready for an IRS-sized dose of malarkey. The massive bill, officially enacted to support farmers but in reality does more to benefit the billion-dollar agribusiness industry, has paved the way for the IRS to come after your tax refund, even if you have good standing with Uncle Sam. According to the Washington Post, Congress’ enacted Farm Bill repealed a statute of limitations on old debts owed to the feds. Historically, this statute prevented the Treasury Department from coming after debtors after ten years. Now, taxpayers across the country are seeing the effects and the government aims to get $1.1 billion.
The article mentions one woman who suddenly had no tax return because the IRS determined that her family was overpaid for her father’s death benefits, which had been paid out since 1960. IRS officials are not sure specifically who was overpaid so they chose her to make up the difference. In all, the IRS has collected $424 million in “new” debt, i.e. debt that has only recently been available to collect in the wake of the statute’s repeal. Yet, this new tactic is not limited to the IRS. The Social Security Administration is now working to get benefits from nearly 400,000 taxpayers, totaling some $714 million.
What does the IRS have to say? “... [W]e understand the importance of ensuring that debtors are treated fairly.” Perhaps the agency should clarify what it means by “fairly” when many taxpayers have received no notice of the actions taken against them. The same woman mentioned above was apparently sent a notice from Social Security but to an address she had in the late 1970s. Generally, the IRS suggests that you keep tax documents for three years, so the accused are depending on the government to produce evidence from their records. It seems that Social Security’s records are often incomplete, making it difficult to contest officials’ claims.
So, to reiterate: a bill presumably designed to protect the agriculture industry included a new power enabling federal officials to take money from Americans who may have indirectly benefited from a payout beyond ten years ago; BUT, those officials don’t really have the records to back up their claims.
There are a few takeaways from this:
What are the alternatives? Quite a few, but let’s look at two. One would address the core problem and one would be a more fair way to get outstanding debt.
If Americans had a simpler tax system, one which didn’t take 6.4 billion hours and $192.6 billion to comply with, some of these errors and inefficiencies would go away. Some proposals would try to cut down on the number of exemptions and deductions one can take, resulting in a more streamlined and less error-prone tax bill. Others take further steps to reform the entire system in the hopes of making tax preparations a mere inconvenience, instead of a heavy burden. NTU Foundation has examined some of these proposals, including the flat tax and the Fair Tax, many of which would reduce federal spending in addition to less time and money spent by taxpayers.
Another option is to change who the government goes after for outstanding debt. Instead of targeting debt that is decades old, IRS and Social Security investigators could shift their focus to those who are alive and kicking. One easy place to start is inside the government itself. According to a handy chart on Don’t Mess With Taxes, the government could recover $3.3 billion in back taxes (that’s 65 percent more than what is being collected in old debt AND it would be from the debtors themselves, not relatives who had no say in the matter).
If legislators should take just one lesson from all of this (and I know that’s asking a lot), it is to write bills that are simple, succinct, and single-issue focused. Taxpayers are on the receiving end of these bloated Acts that put more complexity in the Tax Code. This is also not a wholly partisan issue. As Republicans rally against the Affordable Care Act and the Dodd-Frank Wall Street reforms, Democrats are pitching fits over the Farm Bill and Defense Authorization, all of which are putting taxpayers on the hook for more when they are in need of less.2 Comments | Post a Comment | Sign up for NTU Action Alerts
In 1994, President Clinton pushed Congress to authorize $200 million in grants to help states hire 100,000 new police officers. While the total number of new hires fell well short of that, there's been new legislation introduced in Congress to reauthorize the program that administered the grants -- the Community Oriented Policing Services (COPS) program.
Senator Amy Klobuchar (D-MN) introduced S. 2254, the COPS Improvements Act of 2014, which would fund the program through 2019 at $649 million above current levels. The bill was introduced in an effort to provide "critical resources to local police departments," and is featured in this week's edition of The Taxpayer's Tab.
Also in this week's issue:
For more information on these bills and to view past issues, check out The Tab online.0 Comments | Post a Comment | Sign up for NTU Action Alerts
It seems like everything is in this podcast, Pete Sepp is off in Vancouver for the World Taxpayers Conference, so Michi Iljazi of Taxpayers Protection Alliance joins Doug Kellogg to co-host. Deborah Collier of CAGW calls in to talk about the danger of letting the IRS do your taxes, and the need to keep the "Free File" program. Michael Tasselmyer of NTUF also stops in to talk about the most expensive bill this week. Plus, the Outrage of the Week takes the field!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Budget negotiations in Harrisburg are just around the corner and there’s a chance that a massive tax on natural gas drilling could end up on Governor Corbett’s desk. This is a major concern for tax fighters across Pennsylvania, as Corbett faces re-election and continues to grapple with the Republican-led legislature on how to best deal with the $1.2 billion deficit.
The Tribune-Review reports:
The smart money is on the Senate sending the House a Marcellus shale tax proposal, perhaps in obscure legislation that accompanies the state budget, such as the fiscal code that sets state tax rates…
It’s quite the conundrum for the Governor:
Corbett might not get a shale tax bill from the Legislature before the November election. In that case Democrat Tom Wolf, his party's gubernatorial nominee, will continue to hit the issue and tout it for education funding while pointing to the need to fill budget holes that he says exist due to Corbett's cuts.
Despite pledging to not support tax increases upon entering office, the Governor signed a bill last year to raise gas taxes. Now he’s in another sticky situation, especially since, as the Tribune-Review notes, his re-election campaign is themed “promises kept.”
Instead of working on a tax hike bill that could cripple the Pennsylvania’s energy sector, perhaps lawmakers and the Governor should pursue common sense, cost-saving reforms. Liquor privatization should be at the top of the list.
Over the past few months, National Taxpayers Union has been beating the drum for true privatization of beer, wine, and liquor sales in the Keystone State. Like I said last September in the York Dispatch, Pennsylvania’s liquor laws are an absolute mess. It’s a system that has unfairly constructed anti-consumer monopolies for both government and private entities.
Last month, after catching wind of a faux-privatization plan in Harrisburg, NTU Vice President Brandon Arnold and I penned another piece in the Tribune-Review.
We pointed out that the corruption-riddled Pennsylvania Liquor Control Board (PLCB) is running state liquor stores on a taxpayers tab of approximately $400 million per year. By privatizing sales, the state could save hundreds of millions each year while increasing both competition amongst retailers and convenience for consumers.
Of course, privatizing liquor wouldn’t solve Pennsylvania’s budget crisis on its own, but it would be the best place to start, as would slowing government spending. Here’s to hoping that some fiscal sanity finds its way to Harrisburg over the next few weeks.