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Regulation and Compliance > Federal Regulation > IRS

Watchdog sees IRS PPACA fraud review weakness

By Allison Bell

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An official who monitors the Internal Revenue Service has detected signs of possible problems with agency efforts to prevent health insurance premium tax credit fraud.

J. Russell George, the Treasury Inspector General for Tax Administration, testified about his Patient Protection and Affordable Care premium tax credit fraud concerns Wednesday at an IRS oversight hearing organized by the House Appropriations financial services subcommittee.

George noted that, in September 2013, as the PPACA public exchange open-enrollment season began and consumers were preparing to apply to use the premium tax credits to pay for health coverage, the IRS had not yet put major fraud mitigation systems in place and was still working on two of the systems.

Until the IRS develops and tests the systems, detecting premium tax credit fraud could be a problem, George said.

“We are also concerned about the confidential taxpayer data that will be provided to the exchanges,” George said.

Taxpayers can get the premium tax credit after a tax year is over, but they can use the tax credit while the year is still under way to pay for insurance. IRS officials have argued that PPACA minimizes the risk of fraud by consumers getting the tax credit in advance by having the IRS send the cash straight to the health insurers, rather than to the individual taxpayers.

Another witness — John Koskinen, the new IRS commissioner — said the IRS needs $340 million for PPACA-related information technology systems and $100 million to train employees to answer PPACA questions.

“We’re going to have a lot of inquiries from tax preparers as well as taxpayers,” Koskinen predicted. 

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