Submission of Data on Field Investigation of Doctors

October 25, 1967 REVENUE MEMORANDUM ORDER NO. 81-67 SUBJECT : Submission of Data on Field Investigation of Doctors TO : Revenue Operations Head (Special Operations), All Revenue Regional Directors, Division Chiefs of Special Investigation, International Operations, Anti-Smuggling , Chiefs of Assessment Branches, Revenue District Officers and Fieldmen I. To effectively implement our Tax Returns Compliance Program and the Handbook On Audit Procedures and Techniques all reports of examination for each year submitted by examiners on doctors' tax liabilities shall include the following data: LLjur 1. Name and address of patients treated 2. Amount received for each patient 3. Name of hospital where patient was confined 4. Nature of case, if possible II. Copies of the work sheets embodying the above information shall be forwarded by the Chief of Division or Revenue District Officer concerned to the Management Planning Department immediately upon receipt by him of the examiners' report of examination. III. Compliance to this Order shall begin with the 1966 and prior years verification being conducted currently. The Revenue Operations Head (Special Operations), Revenue Regional Director and Chief, Assessment Branch shall not pass upon the examiner's report of examination if requirements I and II above are not observed. LLphil MISAEL P. VERA Commissioner of Internal Revenue November 3, 1967 Memorandum For: Revenue Operations Head (Special Operations Department) Chief, Special Investigation Division Chief, Anti-Smuggling Division Chief, International Operations Division In connection with our Tax Returns Compliance Program, your examiners are directed to comply with the requirements of the attached Revenue Memorandum Order No. 81-67, dated October 25, 1967. cdtech MISAEL P. VERA Commissioner of Internal Revenue October 6, 1967 MEMORANDUM FOR: The Commissioner In re: VERIFICATION OF DOCTORS' TAX LIABILITIES Progress Report Management Planning Department has received from Narcotic Drugs Division data regarding operations performed by doctors in hospitals. We have summarized these data in cards for each doctor so that at a glance we can determine: 1. Name and address of his patients 2. Date of operation 3. Nature of operation 4. Total operations he performed during the year in each hospital As soon as we received data from other hospitals we shall compile the above pertinent information and proceed as follows: Proposed procedure of Investigation 1. Pick out sufficient number of doctors with considerable performed operations (most number of cards). 2. Requisition their 1965 and prior years income tax returns. In this way, field verification of 1966 tax liabilities will not be usurped. 3. Tabulate in work sheet form the reported Income and Expenses by each doctor, thus one work sheet will show comparative figures for several doctors. 4. Analyse the above figures for declarations out of line or unusual in the medical profession, be it expense, income or net income ratio. 5. Compare, if feasible, carded data with income tax return figure for possible variance. 6. Refer to Tax Fraud Unit "hits" achieved in above systematic information retrieval. LAURO D. ABRAHAN Revenue Operations Head (Management Planning) October 27, 1967 Memorandum For: The Commissioner In re: Progress report on campaign against doctors Progress : 1. We have received additional lists of doctors from the Narcotic Drugs Division, which however pertain to 1966 & 1967 operations lifted from records of big hospitals only. 2. Transferring these data into cards is almost 80% complete and will be finished by next week. 3. Two orders were prepared to effectively implement this campaign: a. Requiring examiners who are currently conducting 1966 & prior years income tax examination to prepare work sheets showing names of patients operated on by doctors (who are under investigation), fees received & other pertinent data b. Requiring the Chief, Narcotic Drugs Division to extend their data gathering to hospitals and clinics big & small, for 1965 and prior years. Audit Program Starting next week : I. Alphabetize and prepare list of all doctors from all cards with collated data. II. Compare list with DPC list of 1965 income tax filers III. Separate (a) apparent non-filers & (b) doctors with large no. of patients based on carded data IV. Requisition from Regional Offices the income tax returns of (1) alleged non-filers and (2) the 1965 closed tax cases , together with their work sheets of doctors with large no. of recorded patients. V. Pinpoint doctors committing tax fraud by: a. Comparing data received from Regional Office (contact with taxpayers) with data gathered from hospitals (No contact with taxpayers) b. Tabulating in work sheet form the income & expenses of the selected doctors and analyzing & comparing their individual income & expense ratios. Any doctor whose figures are unusual is suspect . LAURO D. ABRAHAN Revenue Operations Head ( Management-Planning)