Keeping step with IRS guidance on requirements for tax-exempt hospitals.

Section 501(r) of the Internal Revenue Code, enacted as part of the Affordable Care Act, requires that section 501(c)(3) hospitals conduct community health needs assessments (CHNAs) every three years. Proposed regulations issued in April 2013 provide guidance on the CHNA requirement and other issues arising under section 501(r). The proposed regulations generally supersede the guidance provided in Notice 2011-52, although a transition period is provided. Hospitals can generally rely on the proposed regulations until final regulations are issued.

Proposed regs address new hospital tax-exemption requirements.

Proposed regulations set forth detailed rules for implementing the new tax-exemption requirements of Section 501(r) of the Internal Revenue Code for not-for-profit organizations operating hospital facilities. The proposed regulations provide guidance on the written financial assistance policies (FAPs) that hospital facilities are required to establish. The regulations propose methodologies for determining the amounts that a hospital facility can charge FAP-eligible individuals for emergency and other medically necessary care. They prescribe procedures that hospital facilities would be required to follow before engaging in extraordinary collection actions against an individual.

Tax-exempt status for hospitals: where have we been--and where are we going?

The IRS has two very different published administrative positions on the tax-exemption requirements that apply to hospitals. Hospitals that meet either standard should be recognized by the IRS as tax-exempt. The IRS sometimes appears to be attempting to back away from its more liberal tax-exemption standard (the so-called "community benefit standard"). There is also some pressure coming from Congress to change the applicable rules. Immediate change regarding tax-exemption standards may be more likely at the state and local level than at the federal level.

The new form 990: taking a closer look.

The revised Form 990 will allow the IRS to better assess the risk presented by not-for-profit organizations. The forms will also allow for increased transparency and accountability. Ultimately, the information collected on Form 990 may influence important tax policy changes. Healthcare organizations should keep the varied purposes of the form in mind when making resource allocations and other decisions involving tax compliance.