Congress urges IRS to consider hospital tax exemptions
As states crack down, officials weigh federal-level rules
Topics: Uncompensated Care, Revenue Cycle, Finance
November 01, 2011
As states reconsider not-for-profit hospital tax exemptions, Congress is urging regulators to re-evaluate federal tax exemption and charity care guidelines, the New York Times reports.
The Illinois Department of Revenue this summer denied property tax exemptions to three hospitals based on their charity care levels. In September, Gov. Pat Quinn (D) ordered the department to suspend all future rulings that would deny tax-exempt status to not-for-profit hospitals, affording stakeholders more time to define charity care requirements.
On a national level, Rep. Charles Boustany (R-La.) last month asked the Internal Revenue Service (IRS) to explain its not-for-profit oversight procedures and outline a plan for tighter compliance with laws governing the organizations.
Specifically, he asked the agency for its plan to monitor community benefits provided by not-for-profit hospitals, which are integral to their classification as tax-exempt organizations. He suggested that not-for-profit hospitals "may not be complying with the letter or the spirit of the tax-exempt regime, yet continue to enjoy the benefits of tax exemption."
Not-for-profit hospitals currently are not required to report charity care levels to the IRS, the Times reports. Although the agency has created a new tax form that asks for charity care levels, it does not yet require hospitals to complete it. According to Sarah Hall Ingram, the commissioner of IRS' Tax Exempt and Government Entities Division, the federal health reform law caused the IRS to reconsider the form, which earlier this year was widely panned by health care groups for being too cumbersome.
However, Jessica Curtis, project director of Community Catalyst's hospital accountability project, says delaying charity care reporting requirements could harm patients. She says the ailing economy has prompted many patients to re-examine their health care options, noting that disclosing charity care levels could help them determine where to seek care (Strom, Times, 10/31).
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