CHA News Article

IRS Issues Temporary, Proposed Rules for CHNA Excise Tax

This week, the Internal Revenue Service issued temporary and proposed regulations that provide guidance to charitable hospital organizations regarding the requirement of a tax return to accompany payment of an excise tax. The excise tax has been enacted as part of the Affordable Care Act (ACA) for hospitals that fail to meet the community health needs assessment (CHNA) requirements for any taxable year. Under the temporary regulations, a charitable hospital organization that is liable for the excise tax must file a return on Form 4720 by the 15th day of the fifth month after the end of the organization’s taxable year during which the liability was incurred.

The ACA added Sections 501(r) and 4959 to the Internal Revenue Code. A hospital organization seeking to obtain or maintain tax-exempt status as a charitable organization described in Section 501(c)(3) must comply with the requirements of Section 501(r), including the requirement to conduct a CHNA. Section 501(r)(3), effective for taxable years beginning after March 23, 2012, requires hospital organizations to conduct a CHNA at least once every three years and adopt an implementation strategy to meet the community health needs identified through the CHNA. Section 4959 imposes a tax of $50,000 if a hospital organization fails to meet the requirements of Section 501(r)(3) for any taxable year. A hospital organization fails to meet the requirements of Section 501(r)(3) for any taxable year if it does not conduct a CHNA and adopt an implementation strategy during the three-year period ending on the last day of its taxable year. 

To review the temporary regulations, visit https://s3.amazonaws.com/public-inspection.federalregister.gov/2013-19931.pdf.

To review the proposed regulations, visit https://s3.amazonaws.com/public-inspection.federalregister.gov/2013-19930.pdf.

 

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