Overdue Taxes Can Now Be Subtracted from Medicare Payments

Starting this month, if you owe overdue taxes to the Internal Revenue Service (IRS), your Medicare payments can be decreased accordingly until that debt is fully paid, according to a recently published Medicare Learning Network article.

The Federal Payment Levy Program (FPLP) enables the IRS to collect overdue taxes via “a continuous levy on certain federal payments,” including those made to vendors and contractors who conduct business with the federal government. Under the program, the IRS can reduce a federal payment by as much as 15 percent, or by the exact amount of tax owed, if that total is less than 15 percent of the payment.

The IRS can also reduce future payments by up to 15 percent until the overdue taxes have been fully collected.
How can you determine if any of your payments have been affected by this new program? All Medicare payments adjusted under the FPLP will include a “WU” code in the remittance advice PLB03-1 data field, and the IRS’ toll-free phone number — (800) 829-3903 — will appear in the PLB03-2 data field.

The remittance advice section will also note the amount of money withheld from that particular payment.
CMS is instructing its providers to contact the IRS directly using the provided phone number to discuss any affected Medicare payments, as Medicare contractors are not authorized to intercede or discuss tax situations due to privacy regulations.

The FPLP/Medicare payment action goes into effect on Oct. 1, 2008, with implementation due to start on Oct. 6. The program is in response to Section 1024 of the Taxpayer Relief Act of 1997.

This article originally appeared in the October 2008 issue of Mobility Management.

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