The IRS has revealed its plan to review the community benefit activities of 3,377 tax-exempt hospitals and to monitor the hospitals’ compliance with the requirements for tax exemption. Each hospital will be reviewed in one of three annual phases. The reviews have been referred to as “stealth reviews” because hospitals are not notified that they are being reviewed and will not know when the reviews begin or end.
To meet the community benefit standard established in 1969, each hospital must have a community board, an open and accessible medical staff, and a full-time emergency room open to everyone regardless of ability to pay. The IRS also may evaluate other factors, such as how a hospital uses its excess funds.
Internal Revenue Code Section 501(r) was enacted by the Patient Protection and Affordable Care Act and added new requirements for tax-exempt hospitals. Proposed regulations provide additional details related to financial assistance and emergency medical care policies, charges for emergency or medically necessary care provided to individuals eligible for financial assistance, and billing and collection practices.
Hospitals should pay special attention to their Forms 990, particularly Schedule H, and understand that they will be reviewed by the IRS over the next two years. Hospitals should ensure they are meeting all requirements and reporting those activities accurately on Form 990 and the accompanying schedules.
Have you appropriately addressed all of the new requirements related to IRC Section 501(r)? We can help you navigate the proposed regulations to ensure compliance. If you have questions regarding any of the information provided above, please contact the expert listed below at PYA, (800) 270-9629.
Recommended Links:
Learn more about PYA and Healthcare Tax Services
WE ARE REQUIRED BY IRS CIRCULAR 230 TO INFORM YOU THAT THE FOLLOWING DISCUSSION WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, NOR RELIED UPON, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING ANY PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW. THE ADVICE WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED IN THE DISCUSSION. EACH TAXPAYER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
