IRS and Treasury issue proposed section 501 r rules

Exempt Organizations Tax Services Update

On April 3, 2013, the IRS and Treasury Department issued proposed regulations that for the first time set forth anticipated guidance regarding the consequences for failing to comply with Internal Revenue Code Section 501(r). The proposed rules also provide details regarding the community health needs assessment (CHNA) requirements and related excise tax and reporting obligations, applicable to section 501(c)(3) organizations operating one or more hospital facilities.

Importantly, in announcing that hospital organizations will be given opportunities to correct unintended violations, the proposed regulations indicate that revocation of exempt status is expected to be limited to egregious cases. Clarification is also provided on the application of the rules to hospitals with multiple facilities under a single license or operated through a joint venture.

Public comments in response to the proposed regulations are due by July 5, 2013. The IRS and Treasury announced that they intend to finalize these newly issued proposed regulations in conjunction with finalization of the June 2012 proposed regulations, which addressed other areas of section 501(r) such as financial assistance policies, limitations on charges, and billing and collection practices.



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