Koskinen's IRS May Still Be Targeting Conservative Groups

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Posted by Alexander Hendrie on Tuesday, September 20th, 2016, 2:11 PM PERMALINK

IRS Commissioner John Koskinen will appear before the House Judiciary Committee to defend himself against impeachment charges following his role in the Lois Lerner targeting scandal.


Koskinen was appointed to lead the IRS after promising to bring transparency and openness to the embattled agency. He has failed.

Serious internal control flaws mean the IRS may still be unfairly selecting Americans for an audit “based on an organization’s religious, educational, political, or other views,” according to a pair of reports released by the Government Accountability Office (GAO) last year.


As GAO notes, certain deficiencies increase the risk of unfair audit selection based on a taxpayer's First Amendment rights. As the report finds:

“The control deficiencies increase the risk of selecting organizations for audit in an unfair manner—for example, based on an organization’s religious, educational, political, or other views.”

GAO audited Wage & Investment (W&I) and Small Business/Self-employed (SB/SE) divisions in response to a request from House Ways & Means Committee members led by Chairman Kevin Brady (R-Texas) and Oversight Subcommittee Chairman Peter Roskam (R-Ill.).

These requests were made in response to IRS targeting conservative groups. This targeting resulted in just one conservative non-profit being granted tax exempt status over a three year period.

As Chairman Brady and Roskam note, selection flaws mean the IRS is failing to apply tax law in a fair and equitable manner. The Ways & Means Committee summarized the findings of each report, as found below:

GAO Report on Small Business/Self Employed Unit

  • GAO found that the IRS does not have strong internal controls and did not have consistent procedures for documenting audit selection decisions, which increases the risk of unfair audit selection.
  • GAO concluded that “the lack of strong control procedures increases the risk that the audit program’s mission of fair and equitable application of the tax laws will not be achieved.”

GAO Report on Wage & Investment Unit

  • Similar to the other business units, GAO found that the Wage & Investment unit did not always document how cases were selected for audit.
  • GAO found that the IRS did not provide support for changes in selection processes and procedures.
  • GAO also found that the IRS does not conduct continuous reviews of its audit selections, and instead only reviews it once a year.
  • GAO concluded that internal controls should be strengthened to “provide greater assurance that W&I is fulfilling its mission to select tax returns with fairness and integrity.”
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Koskinen’s IRS: Meet the Shredder that Destroyed Lois Lerner’s Hard Drive

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Posted by Americans for Tax Reform on Tuesday, September 20th, 2016, 11:55 AM PERMALINK

IRS Commissioner John Koskinen will appear before the House Judiciary Committee to defend himself against impeachment charges following his role in the Lois Lerner targeting scandal.


Koskinen was appointed to lead the IRS after promising to bring transparency and openness to the embattled agency. He has failed.

Lois Lerner’s hard drive met its end in the amoral maw of an AMERI-SHRED AMS-750 HD shredder, according to testimony submitted last year by the Treasury Inspector General for Tax Administration.


In 2011, after an IRS-contracted Hewlett Packard technician serviced Lerner's laptop and determined the hard drive "more than likely crashed due to an impact of some sort," and after a different technician in the IRS Criminal Investigation Division noted there was “some scoring on the top platter of the drive,” the hard drive made its way to a recycling facility in Florida operated by the Federal Bureau of Prisons.

The testimony states:

“We determined by obtaining the certificate of destruction dated April 16, 2012, interviews with the facility manager, and a search of the facility, that this shipment of hard drives was destroyed using an AMERI-SHRED AMS-750HD shredder. TIGTA agents observed the shredder in operation and noted that the shredder cut the inserted hard drives into quarter-sized pieces, and according to the facility manager, those pieces are then sold for scrap.”

Video footage of the 7.5 horsepower, 2,700-lb. shredder in action can be found here

Photo Credit: 
Ameri-Shred Corp., http://bit.ly/1NksoEn

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Koskinen's IRS Failed to Search Five of Six Locations for Lois Lerner Emails

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Posted by Alexander Hendrie on Monday, September 19th, 2016, 5:04 PM PERMALINK

IRS Commissioner John Koskinen will appear before the House Judiciary Committee to defend himself against impeachment charges following his role in the Lois Lerner targeting scandal.

Koskinen was appointed to lead the IRS after promising to bring transparency and openness to the embattled agency. He has failed.

The IRS failed to search five of six possible sources of electronic media for Lois Lerner’s emails, according to documentation released by the House Oversight Committee in July 2015.

Over the course of investigations into the Lois Lerner targeting scandal, Commissioner John Koskinen repeatedly assured Congress that he would provide all of Lois Lerner’s emails. But based on testimony from the Treasury Inspector General for Tax Administration (TIGTA), this did not occur. The agency’s ineptness -- or corruption -- resulted in 24,000 Lerner emails being lost when they were “accidently” destroyed. 

According to TIGTA official Timothy Camus, the IRS had six possible sources to search for Lois Lerner’s emails:

“The hard drive would have been a source, Blackberry source, backup tapes a source, the backup tapes for the server drives and then finally the loaner lap tops.”

When asked how many of these sources the IRS searched, Camus was unable to say for certain whether the IRS had searched for any. While Camus did acknowledge that agency employees initially checked her hard drive, it appears that more could have been done to recover data from this source. Instead, all data was deemed unrecoverable after a brief search:

“We’re not aware that they searched any one in particular. They did – it appears they did look into initially whether or not the hard drive had been destroyed, but they didn’t go much further than that.”

The agency’s refusal to conduct due diligence in its search for Lerner’s emails meant that 1,000 emails were not found until TIGTA searched backup tapes. When asked why the IRS did not give these emails to Congress, Camus said it was because the agency never looked for them in the first place:

“To the best we can determine through the investigation, they just simply didn’t look for those emails.”

Commissioner Koskinen stated that the IRS took “extraordinary efforts” to recover any emails, but this is clearly not the case. Years after the investigations into the Lois Lerner targeting scandal began, the agency’s unprecedented obstruction has meant Americans are no closer to the truth.

Photo Credit: 
Becky McCray, https://www.flickr.com/photos/bjmccray/

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Jim Irish

The solution to the gross malfeasance of the IRS is not to reform the federal agency but to dismantle it brick by brick and then adopt a Fair Tax.


There is no such thing as a lost email. These systems are redundant just in case there is a system crash. And, as a last resort there are digital backup tapes that are used to store information. Also, whichever company was used as a spam filter, they have copies of everyone's emails as well...So this lame idea that emails can be lost is an insult to everyone's intelligence, even the low information Democrat Party voter...

jim mayer

So let's see, TruePundit reports "Documents appear to implicate State Dept. in cover-up on Clinton emails" Get that? An entire Government Agency committing crime to shield one of their own.

Here they report IRS is guilty of corruption to protect one of their former power abusers.

At DOJ, Loretta Lynch kisses the ring in Phoenix and promises the one who hired her that she would protect the Queen at any cost.

At FBI, James Comey's formerly esteemed reputation has finished circling the toilet bowl drain as he finds himself now trying to explain why he refused to pursue criminality so egregious, with a cache of damning evidence so overwhelming one might need to back a semi up to the courthouse steps to unload all of it.

Health Human Services Secretary Kathleen Sebelius is being paid for the rest of her life for creating a disaster... You know I could go on for hours.
This country is so depressed right now and they don't know why. The cognitive dissonance, the inability to recognize the unmistakable source of the problem.... is us, the voting public.

We are becoming a Godless people electing Godless people. The coming storm won't be a random act, we are bringing the rain down upon our own heads. Unfortunately, the rain will fall upon the righteous as well as the unrighteous.

Norquist: We Have Come “Too Far” to Let This Effort Die

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Posted by Krista Chavez on Monday, September 19th, 2016, 4:44 PM PERMALINK

Last week, Americans for Tax Reform President Grover Norquist and President and CEO of The Leadership Conference on Civil and Human Rights Wade Henderson co-authored an opinion article for National Review, stressing the opportunity with which Congress is presented to pass comprehensive, bipartisan criminal justice reform this year.

The 11 bills proposed in this criminal justice reform package offer responsible provisions to increase public safety, protect law enforcement, help crime victims, address issues with re-entry, and decrease the burden of taxpayers on upholding the prison system that is currently costly and ineffective.

They discussed the significance of Congress’s unique bipartisan support for the issue of criminal justice reform, citing sources that show about 70 percent approval for the initiative among both Republicans and Democrats. This figure depicted a win-win on both sides of the aisle in a controversial election year.

“Given all this success, you would say these policies have every chance of becoming law, right?” asked Norquist and Henderson. Unfortunately, they found that the issue is not that simple even though it should be.

Americans for Tax Reform, along with The Leadership Conference on Civil and Human Rights and the US Justice Action Network, called on Congress to step up and pass the single most bipartisan effort sitting on Capitol Hill.

Included in the reforms are important changes to intent standards in criminal law—a major policy priority for conservatives concerned with the overregulation of innocent every-day Americans.

“We have come too far to let a rare bipartisan effort like this die. Our country is ready to turn away from the discredited policies that exploded our prison populations and failed to give us the public safety we deserve. Our justice system should be a part of the solution to crime and its root causes. We can do better than using a one-size-fits-all sentencing regime that lumps nonviolent offenders with violent ones. And when some estimates have re-arrest rates for ex-offenders at 65 percent within three years, we cannot afford to continue the status quo. The reforms on the table would improve outcomes while ensuring that public safety is a top priority.”

Read the full article here, and urge your representatives in Congress to pass bipartisan criminal justice reform in 2016.  

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Good Fences Make Good Neighbors: The Mobile Workforce State Income Simplification Act

Posted by Katie McAuliffe on Monday, September 19th, 2016, 2:43 PM PERMALINK

On Friday, September 6th, Americans for Tax Reform sent a letter to Congressmen in support of the Mobile Workforce State Income Tax Simplification Act, HR 2315. ATR urges Congress to vote in favor of this bill to establish clear boundaries and presence standards based on a state’s physical border. As the digital world makes us increasingly more mobile, this bill will prevent states from taxing out-of-state residents.

The full letter can be found below, and here.

Dear Congressmen:

On behalf of American taxpayers, I write in support of the Mobile Workforce State Income Tax Simplification Act, H.R 2315, which establishes a clear and consistent physical presence standard for employee income tax reporting.

This legislation, introduced by Congressmen Mike Bishop and Hank Johnson, passed the House Judiciary Committee with a reported vote of 23 yeas and 4 nays.

It is important to establish a physical presence standard for the American workforce particularly as technology allows us to be even more mobile.  Establishing clear borders based on a state’s physical border will be even more important as technologies take us beyond telework and towards the possibilities of telemedicine and advanced education.

When an employee travels from one state to the next, there are varying rules throughout the 50 states as to when an employee’s income tax needs to be reported by an employer and paid by the employee.  

For example, Colorado will tax any income earned within the state if an individual has worked there at least one day.  Hawaii and Arizona require withholding for work that exceeds 60 days. Other states do not use a time requirement at all, but tax based on a specific dollar figure earned while in the state.

Most individuals are not aware of the varying non-resident state income tax filing rules, and employers incur extraordinary expenses to comply with withholding requirements.  

This is especially difficult for those able to offer support in the event of a natural disaster. People with specialized skills - doctors, nurses, electricians, arborists, decontamination crews, etc. - are in high demand following these events.  These skills are not bound by location; they can mobilize to accelerate healing and repairs for a community after a disaster.

H.R. 2315 establishes a clear physical presence standard for cross-border work by keeping states from taxing most nonresident employees until the employee is present and working in the state for more than 30 days during the year.  This minimizes bureaucratic hurdles, allows employees to keep more of their own paycheck, and simplifies tax compliance.

I encourage Congress to support American workers with clear consistent tax collection boundaries based on a state’s physical borders. 

If you should have any questions regarding this issue please contact me, or Katie McAuliffe at kmcauliffe@atr.org or 202-785-0266.


Grover G. Norquist

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Obama-touted Census Report Used “Redesigned Income Questions”

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Posted by Laurens ten Cate on Friday, September 16th, 2016, 11:44 AM PERMALINK

While campaigning for Hillary Clinton this week, President Obama announced new Census Bureau numbers on Median household income. A supposed 5.2% increase over 2015, the biggest increase in real wages (inflation adjusted) since 1967 when they started collecting this data

The release of these numbers seemed very convenient, less than two months before the election.The Census Bureau and Obama failed to mention a key fact buried in the footnotes of the 70-page report: They used “redesigned income questions” to skew the results in their favor, as shown below:

Americans expect that as a non-partisan entity the Census Bureau would put this information about their data collection methods in their press release, but that didn’t happen.

Also: The Bureau of Labor Statistics just released their new average weekly wages data from the first quarter of 2016 which reports a 0.5% yearly decrease in wages. What’s really going on here?

First of all it should be noted that the Census Bureau data is actually from 2015 while we are already at the end of the third quarter of 2016, and a lot has changed since then. The only group that actually has current data is Sentier Research. Sentier Research is a statistics research group that releases monthly reports on US incomes. They are founded and run by ex-Census Bureau statistics division employees.

The influential finance blog Zerohedge tipped us off that the census bureau actually redesigned some of the questions they use to measure the income. Their report footnotes state: “The 2014 CPS ASEC included redesigned questions for income and health insurance coverage. All of the approximately 98,000 addresses were eligible to receive the redesigned set of health insurance coverage questions."

Starting in 2014, the Census Bureau began to “collect the value of assets that generate income if the respondent is unsure of the income generated.” And the government started to use “income ranges” as a follow-up for “don’t know” or “refused” answers on income-amount questions. These changes are hidden quite deep in the footnotes of the original Census report.

What really made our alarm bells ring on the figure Obama used in his stump speech for Hillary was the new data from the Bureau of Labor Statistics on the weekly wage changes from the first quarter of 2016. Their report shows that 167 of the 344 largest counties had weekly wage decreases. The average of all 344 largest counties was a decrease of 0.5%!

The data from Sentier Research is monthly, with the most recent data release from July 2016. Gordon Green from Sentier Research was quoted by the New York Post as admitting that indeed the 5.2% figure seems correct but that since then it has slackened off significantly. Next to that, Gordon Green said that the gasoline prices were a huge factor for increases in median household income.

Gas that has dropped in price like a brick since 2014 might have been behind the high numbers in 2015. However, now that gasoline prices are rising slightly again these gains have evaporated. 

It seems that this 5.2% increase might be explained by just these changes. What's even worse however is the fact that current data shows a significant slowdown in growth. Even with the changed questioning.

As for the current data? The graph below shows the Real (adjusted for inflation) Median Household Income and Nominal income. We can see the upswing in 2015 which interestingly enough still does not go above the high in pre-recession 2008. After the 2015 upswing we already see the downward trend happening.


Obama’s claim to have “the most transparent administration in history” is again rendered laughable.

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US Embessay

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Vermont Carbon Tax Would Raise Gas Prices and Impact the Nation

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Posted by Johnathan Sargent on Wednesday, September 14th, 2016, 4:19 PM PERMALINK

Lawmakers in Vermont have proposed legislation that could lead to hikes in gas prices and energy bills in the state, and have implications across the country. Currently, in the Vermont House of Representatives debate is ongoing as to whether Vermont will be the first state to enact a carbon tax. If lawmakers choose to do so, it will have a devastating economic impact on not only businesses and the citizens of Vermont, but for every American and business across the country.  

For the past few years within the Green Mountain State a campaign called “Energy Independent Vermont” has been gathering support for a carbon tax. This coalition of far left environmental groups has argued to lawmakers that the only way to reduce emissions is to limit the amount of energy that Vermont citizens use.

How do they propose to do this? By taxing carbon, thereby making energy more expensive for Vermont residents. The two pieces of legislation, H. 395 and H. 412, will steadily increase the cost of affordable and reliable energy over a 10-year span. According to research by the National Association of Manufacturers (NAM) and the Ethan Allen Institute, if enacted, this legislation will increase the cost of affordable energy across the board, affecting every person in the state of Vermont.

This means that the costs for coal, oil, natural gas, and other energy sources that Americans use every day to drive to work, cook food, and keep their house warm will increase. According to the study by NERA Economic Consulting and the National Association of Manufacturers, a carbon tax in Vermont would increase gas prices by 20 cents a gallon, electricity bills would go up by 19 percent, and the cost of natural gas would increase by more than 40 percent. This is in addition to the jobs lost in the services and manufacturing sectors.

The tax increase is projected to raise $500 million a year. However, not all of the $500 million in new revenue from taxpayers will go directly to the state. Instead 10 percent of the proceeds will go to the Vermont Energy Independence Fund (VEIF), a replacement for the Clean Energy Development Fund (CEDF) that is now nearly bankrupt.

An unspecified amount of money will also be used to replace the solar investment tax credit. This disastrous proposal would in effect tax the citizens of Vermont in order to fund various green energy pet projects, which would most likely fail on their own without government intervention.

Passing a carbon tax in Vermont will also greatly affect citizens outside of the state and across the country. Currently, in a hand full of states a carbon tax debate is taking place similar to the one in Vermont. Should Vermont pass a carbon tax, other states could look to do the same.

This is a battle years in the making. Pro-carbon tax groups have had years of preparation and millions of dollars in financing to sway the debate. If something is not done in Vermont then in only a few years from now millions of Americans could also be facing increased gas prices and higher electricity bills. All while the green energy pet projects of lawmakers receive millions of dollars of taxpayer money. 


Photo credit: Mike Mozart 

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Good Fences Make Good Neighbors: Business Income Taxes

Posted by Katie McAuliffe on Wednesday, September 14th, 2016, 1:26 PM PERMALINK

Today, Americans for Tax Reform sent an open letter to Congressmen in support of the Business Activity Tax Simplification Act (BATSA), HR 2584. ATR urges Congress to vote in favor of this bill to reiterate the fact that states do not have the authority to tax outside of their own borders, as well as to continue to take steps to strengthen the physical nexus standard.


The full letter can be read below, as well as here:


Dear Congressmen:

On behalf of American taxpayers, I write in support of the Business Activity Tax Simplification Act (BATSA), H.R 2584, which reiterates that states do not have the authority to tax outside of their own borders.

States are adopting policies that force new tax liability onto those with a mere “economic nexus.” Codified in many different forms across the country, the economic standard grants nebulous authority to force out-of-state, nonresidents to comply with a state’s tax code.

The gradual shift to economic nexus is an attempt by states to raise tax revenue beyond what their own economies and taxpayers can sustain. Economic nexus poses a direct threat to the principles of democracy and republican governance by the people, shifting the cost of government to non-residents.

BATSA promotes inter-state economic activity by eliminating the burden for businesses of having to comply with varying and complex state income tax laws. It establishes a clear physical presence standard for taxing multistate businesses engaged in cross-border transactions.

Congress has well-established Constitutional authority to protect against economically destructive state tax laws.

As Congress reiterates to wayward states that digital borders are no broader than physical borders, BATSA could not come at a more critical juncture. 

This legislation, introduced by Reps. Steve Chabot and Bobby Scott, passed the House Judiciary Committee with a reported vote of 18 yeas and 7 nays. 

I encourage Congress to avoid attempts to weaken the physical nexus standard, and to continue taking steps that strengthen physical nexus by passing the Business Activity Tax Simplification Act.

If you should have any questions regarding this issue please contact me, or Katie McAuliffe at kmcauliffe@atr.org or 202-785-0266.

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Obama Debt-Equity Rules Will Reduce Investment and American Competitivenes

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Posted by Alexander Hendrie on Wednesday, September 14th, 2016, 10:00 AM PERMALINK

Soon to be finalized Debt-Equity regulations promulgated under Section 385 of the tax code will restrict the ability of American businesses to compete overseas and make routine investment and financing decisions. For decades, businesses have structured themselves around existing rules that differentiated the tax and legal treatment of debt and equity.  

Now, these new regulations will empower the IRS – an agency that has become increasingly dysfunctional and politicized over the past eight years – with the authority to enforce confusing and complex new rules on American businesses. Despite the objections of Democrats, Republicans, and former Treasury officials, President Obama is set to unilaterally rush through these new rules in the twilight of his presidency, with little thought to how they will affect businesses.

As examined in a report by PricewaterhouseCoopers, Section 385 regulations will impact internal business transactions related to both inbound (foreign business operating in the U.S.) and outbound (U.S. businesses operating overseas) transactions.

The new rules will give the IRS extensive power over common transactions used by businesses to transfer assets across subsidiaries, including transactions used to financing the construction of a new factory in the U.S. by shifting cash across subsidiaries through a loan, or any routine transferring of cash across subsidiaries for finance purposes. Under the proposed rules, IRS bureaucrats have near unlimited authority to reclassify transactions as they see fit. 

As noted by PwC, Section 385 regulations will increase the costs of transactions in a way that is comparable to hiking the corporate income tax rate. In turn, this will result in less money invested in the economy, slow the already stagnant U.S. economic growth, and further encumber the creation of new jobs.

Already, American businesses are struggling to compete with the rest of the world because of our out-of-date, overly complex tax code. As shown in the chart below, America’s corporate income tax rate is close to 15 percent higher than the average in the developed world. The tax rate has barely changed since tax reform was passed 30 years ago in 1986.  At the time, we lowered our rate to 39 percent – below the developed average of 44 percent. Since then, other countries have cut their rates aggressively, yet U.S. lawmakers have failed to do the same for our code.

Chart by Strategas Research Partners using Tax Foundation and OECD data

Our failure to lower our corporate rate to a competitive level and to modernize the system of international taxation has resulted in close to 50 American businesses leaving the country through an inversion in the past decade, according to data compiled by Democrats on the Ways and Means Committee. America has also lost an additional $179 billion worth of assets through acquisitions by foreign competitors, according to a report by Ernst and Young.

While there is a clear need for pro-growth tax reform, the proposed regulations will take the tax code in the other direction. The regulations will increase compliance costs and the cost of capital, making new investment more difficult and make harder for American businesses to compete with foreign competitors. 

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Report: Government Failing to Verify Obamacare Eligibility

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Posted by Natalie De Vincenzi on Tuesday, September 13th, 2016, 3:03 PM PERMALINK

The federal government is failing to verify enrollment and eligibility information for individuals enrolled on Obamacare exchanges or on Obamacare’s Medicaid expansion, according to two reports by the Government Accountability Office (GAO). Individuals who did not meet the eligibility requirements were still being approved, resulting in billions of dollars in payments by the government to fraudulent individuals.

GAO performed undercover testing and created fictitious accounts for 2015 and 2016 to check if applicants were being properly verified. GAO tested enrollment verification on both the federal and state exchanges. In both cases, GAO found insufficient verification of its fictitious applicants and determined that the marketplaces still remain vulnerable to fraud.

With its passage, Obamacare created two new government programs: exchanges for private insurance and the expansion of Medicaid. In order for enrollees to be eligible for subsidies or Obamacare’s Medicaid expansion, applicants must meet basic eligibility requirements. To be eligible, an applicant must provide their Social Security number, proof of citizenship, household income, and family size. This information is then verified by an electronic verification system or approved by HHS.

Obamacare exchanges unable to screen fictitious applicants

In 2015, GAO created ten fictitious accounts that did not meet the eligibility requirements and therefore, should not have been approved. In four of these accounts, the GAO used Social Security numbers that had never even been issued. The other applications were duplicately enrolled or received coverage by claiming that their employer-provided care did not meet the minimum coverage requirements. As the 2015 report notes, all ten applications were approved even though fraudulent or insufficient documentation was provided:

“Although 8 of these 10 fictitious applications failed the initial online identity-checking process, all 10 were subsequently approved.”

Similarly, in 2016 GAO used fictitious applicants to check for basic identity and citizenship verifications, and found that all eight applications were approved even though the applicant’s identity was fraudulent. As the 2016 report notes:

“For eight applications, GAO used new fictitious identities to test verifications related to identity or citizenship/immigration status and, in each case, successfully obtained subsidized coverage.”

Obama’s Medicaid expansion fails to screen fraudulent applicants

GAO also tested whether Obamacare’s Medicaid expansion properly screened individuals that provided insufficient or fraudulent documentation. For each application, GAO provided identity information that did not match the records of the Social Security Administration. For two of these applications, the GAO was asked to submit supporting documents. Despite this documentation being fraudulent both applicants were approved. As the report notes:

“For eight additional fictitious applications, initially made for Medicaid coverage, GAO was approved for subsidized health-care coverage in seven of the eight cases through the federal Marketplace and the two selected state marketplaces.”

These latest findings should not be surprising. Watchdog groups have raised concerns that the federal government is not properly verifying enrollment eligibility for Obamacare on numerous occasions. Since the start of 2015, government watchdog groups have released warnings at least ten other times:

  • A February 2016 report found that the federal government has failed to properly monitor enrollee eligibility for Obamacare, according to a report by GAO. As a result, the government has made billions of dollars in Obamacare subsidy payments to individuals that may have been committing fraud.


  • ‘An auditor’s report examining Minnesota’s Obamacare exchange found the exchange enrolled more than 100,000 individuals who were ineligible for the program. In all, the audit estimated an error rate of close to 50 percent, and the state overpaid up to $271 million over the five-month period that was analyzed by auditors.


  • A December 2015 report by the Health and Human Services Inspector General (HHS OIG) found that CMS relied entirely on data from health insurers to verify whether enrollees had paid their premiums and were eligible. However, this data was completely insufficient - insurers provided payment information on an aggregate rather than enrollee-by-enrollee basis, making verification all but impossible. 


  • A October 23, 2015 report by GAO found that Obamacare exchanges (both state and federal) were failing to verify key enrollment information of applicants including Social Security numbers, household income, and citizenship.


  • A September 1, 2015 report by the Treasury Inspector General for Tax Administration (TIGTA) found that Obamacare exchanges are failing to provide adequate enrollment information to the IRS for proper payment and verification of tax credits.


  • A August 2015 report by HHS OIG found that the federal exchange is failing to verify Social Security numbers, citizenship, and household income of Obamacare applicants. As a result, the exchange is unable to verify whether applicants are properly receiving tax credits.
  • A July 16, 2015 audit by GAO found that 11 of 12 fake 'test' applicants received coverage for the entire 2014 coverage period despite many using fraudulent documents, and others providing no documentation at all. From these 11 applicants alone, Healthcare.gov paid $30,000 in tax credits.
  • A June 16, 2015 report released by the HHS OIG found that $2.8 billion worth of Obamacare subsidies and payments had been made in 2014 without verification.


  • A June 10, 2015 TIGTA report found the IRS failed to properly administer nearly $11 billion in Obamacare tax credits.
  • A May 21, 2015 report by TIGTA found that the IRS failed to test Obamacare processing and verification IT until a week before the filing season began.
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