CCS Oncology and a related company owe the Internal Revenue Service and New York State a combined $1.78 million in back taxes, according to documents filed with the Erie County Clerk's Office.
Two weeks after the Internal Revenue Service filed a $1 million tax lien against CCS Oncology, the IRS has placed a new $461,000 lien against a related company, CCS Medical, that shares an address with the large regional provider of community-based cancer care.
And New York State last week filed tax warrants against CCS Oncology and CCS Medical that total $278,166.
The new federal lien and the state tax warrants are the latest financial troubles facing CCS Oncology, which is the subject of a federal investigation, has been sued by vendors and suffered a significant blow when Independent Health dropped the practice from its network last year.
The move by Independent Health took effect last December and led to an exodus of patients and oncologists from CCS, which said it once held 30 percent of the cancer-care market in the area.
Former vendors from Tennessee and Ohio have sued CCS for nonpayment and other claims of wrongdoing. CCS is suing to keep Catholic Health System from kicking it out space the practice leases in Kenmore Mercy Hospital.
The Buffalo News reported in the spring that the federal government is investigating CCS billing irregularities, at the same time that a whistleblower had filed a lawsuit alleging widespread misconduct at the practice. Dr. W. Sam Yi, the medical director of CCS Oncology, denied any wrongdoing. No charges have been filed.
Both federal tax liens cover the tax period ending June 30 of this year.
Brendan Chiarilli, a spokesman for CCS Oncology and its non-oncology CCS Healthcare practice group, did not respond to messages seeking comment.
The first notice of federal tax lien, for $1.04 million against CCS Oncology, was dated Oct. 12 and filed with the County Clerk's Office on Oct. 24. The second lien, for $461,004 against CCS Medical, was dated Oct. 27 and filed with the Clerk's Office on Thursday. Both companies share an address of 160 Lawrence Bell Drive, Suite 112, Amherst.
It's not clear how much, if any, of the tax debts CCS has paid since the dates of the notices.
Both documents state CCS didn’t pay to the federal government the income, Social Security or Medicare taxes withheld from employee paychecks, or the business’ own Social Security and Medicare taxes.
The IRS regularly goes after companies that withhold taxes from their employees' paychecks but then fail to deposit that money with the federal government, said Gary P. Bluestein, a partner with Andreozzi Bluestein who focuses his practice on tax law, speaking generally in a recent interview.
Companies are required to file a form quarterly with the IRS notifying the agency that they have made the required deposits of this withheld money. But in cases where companies have vendors coming after them for payment, the company often will pay the vendors first because the payroll tax payments can be put off, Bluestein said.
A federal tax lien is the government's legal claim against the property of a taxpayer who hasn't paid a tax debt. The IRS doesn't need a judgment to collect the taxes it's owed, but the agency files a notice of federal tax lien in order to put other creditors on notice that the government has a claim to the taxpayer's property.
A state tax warrant is a legal judgment that creates a lien against a taxpayer's property. It puts the interests of the state ahead of other creditors that are looking to get their money back from a taxpayer.
Cary Ziter, a spokesman for the state Department of Taxation and Finance, said the warrants against CCS Oncology and CCS Medical cover the same liability periods ending March 31 and June 30. He said, with interest, that the amounts owed have risen slightly to $193,824 for CCS Oncology and $85,818 for CCS Medical, as of Friday.
He said the state doesn't disclose the specific taxes owed by taxpayers. But Ziter said, speaking generally, businesses that face tax warrants often owe sales tax or withholding tax to the state.
It's not surprising that CCS is facing financial difficulties, said Larry J. Zielinski, a former president of Buffalo General Medical Center who now teaches at the University at Buffalo.
CCS built a business model that focused on radiation oncology, which features intensive procedures that are reimbursed at a high rate, before broadening into other oncology lines and primary care in order to boost referrals into that lucrative specialty, he said.
When Independent Health dropped CCS from its network, it cut out a good piece of CCS' business, Zielinski said.
And with vendors --- and a CCS physician --- filing nonpayment lawsuits, along with the tax liens and warrants, it's a sign CCS has cash-flow problems, he said.
Patients now shouldn't worry, Zielinski said, but it raises long-term questions.
"Certainly the business-related issues are going to catch up with the effective function of the practice longer-term," Zielinski said.