The IRS has issued guidance that addresses the community health needs assessment (CHNA) requirements and related excise tax and reporting obligations that apply to Code Sec. 501(c)(3) hospital organizations. The IRS and the Treasury Department describe specific provisions relating to the CHNA requirements that are likely to be included in proposed regulations under new Code Sec. 501(r). The guidance is published in advance of the effective date for meeting the CHNA requirements to allow hospital organizations to begin the process of conducting CHNAs and implementing strategies to meet community health needs. The CHNA requirements are effective for tax years beginning after March 23, 2012.
The topics covered are the anticipated regulatory provisions regarding hospital organizations required to meet the CHNA requirements, hospital organizations that have multiple facilities, the documentation of a CHNA, how to conduct a CHNA, the community served by a hospital facility, persons representing the broad interests of the community, making a CHNA widely available to the public, the implementation strategy and its adoption, excise taxes for failure to meet CHNA requirements, reporting requirements related to CHNAs and effective dates. The IRS previously issued Notice 2010-39, I.R.B. 2010-24, 756, to request comments regarding the new requirements, and it has considered all comments regarding the CHNA requirements sent in response to the previously issued notice.
Only organizations operating state-licensed hospital facilities will be considered hospital organizations that must satisfy CHNA requirements prior to the effective date of any future guidance. The Treasury Department and the IRS intend that future guidance regarding any categories of organizations that provide hospital care as their principal exempt function or purpose will only apply prospectively, after an opportunity for notice and comment.
An excise tax of $50,000 is imposed by Code Sec. 4959 on a hospital organization that fails to meet the CHNA requirements with respect to any tax year. The tax will be imposed on any hospital organization that fails to satisfy the CHNA requirements with respect to a hospital facility in any three-year period. Each application of the excise tax will be applied separately for each hospital facility’s failure to meet the CHNA requirements. Hospital organizations are required to report under Code Sec. 6033(b)(10)(D) on their Forms 990 the excise tax imposed on the organization.
Code Sec. 6033(b)(15)(A) requires a hospital organization to describe how it is addressing the needs identified in each CHNA and a description of the needs that are not being addressed along with reasons why the needs are not being addressed. New questions have been added to Form 990, Schedule H, Hospitals, to reflect the new reporting requirements. Responses to the questions on Forms 990 are optional for tax years beginning on or before March 23, 2012. In addition, in guidance to be issued in the future, the IRS intends to require hospital organizations to attach to their annual Forms 990 their most recently adopted implementation strategy for each of their hospital facilities.
The Treasury Department and the IRS request comments regarding the CHNA requirements described in this guidance. Comments are specifically requested regarding definitions of a hospital organization, a hospital facility, a CHNA, a community served by a hospital facility, and an implementation strategy. Comments should be submitted on or before September 23, 2011.
Notice 2011-52, 2011FED ¶46,410
Code Sec. 501
CCH Reference – 2011FED ¶22,609.30
Code Sec. 4959
CCH Reference – 2011FED ¶34,258.01
Code Sec. 6033
CCH Reference – 2011FED ¶35,425.116
Tax Research Consultant
CCH Reference – TRC EXEMPT: 9,000