There is a very big project going on in which the IRS, State Tax Departments, State Attorney’s General and the Justice Department are engaged. Medicaid fraud cases involving home health agencies. It usually starts with a home health agency owned by non-citizens. If the agency is located in a state with income taxes, the state then commences a net worth tax audit on the business owner. Usually, as with any American, there are problems with the return. Then commences a criminal tax filing alleging tax fraud and because the company is owned by a new or non-citizen with ties overseas, they ask for no bond and make statements about the medicaid fraud investigation that they are pursuing. Many times they will get the tax preparers involved as well with offers of immunity. At that point, the Government can force open the books of the home health provider. The other trick is to have the IRS pursue an indictment for failure to collect and pay over employment taxes. Usually this is a civil issue, but for these cases they use the criminal means to again force open the books of the company. While there is a ton of fraud in the home health industry, this particular program seems to be similar to the old mafia investigations where corruption could not be proved, so tax laws are used instead. So, to home health agencies out there a couple of words of warning. (1) Pay your withholding taxes, even if you don’t pay yourself, your rent or any other bill; (2) Make sure your personal tax returns are unassailable. Don’t simply trust your preparer. Review the returns carefully to ensure that all items of income and expense are properly taken. Remember you sign those returns under penalties of perjury. (3) If the FBI, IRS, or a state tax agent starts an audit engage a seasoned tax professional to get involved at the earliest possible time. This could mean the difference between an indictment and a civil penalty,. If you have returns out there that have problems and YOU HAVE NOT YET BEEN CONTACTED BY AUTHORITIES, consider voluntarily amending them and paying the taxes, interest and penalties now. (or at least starting a voluntary payment arrangement with the tax authority). If you are an immigrant and have family members overseas that you support, try to keep a log of what you send overseas and to whom. That way, when the Government comes calling you have a record of where the money went. Lastly, remember that if your gifts to any one person (anywhere in the world) exceed $13,500 you need to file a Federal Gift tax return. With these tips you might avoid a long spell in jail.