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Healthcare Alert: Attention Charitable Hospitals - CHNA Deadline Nears


3/27/13

Synopsis:
 
Hospitals that are tax-exempt organizations under section 501(c)(3) of the Internal Revenue Code must conduct a community health needs assessment (“CHNA”) and adopt an implementation strategy to meet the community health needs identified through the assessment for each of their hospital facilities by the last day of their first tax year beginning after March 23, 2012 (e.g., by December 31, 2013 for a calendar-year hospital). Tax-exempt hospital organizations are subject to a $50,000 excise tax with respect to each hospital facility’s failure to meet the CHNA requirements for any tax year, and must comply with Form 990 reporting requirements related to CHNAs.
 
Suggested Action:
 
After reviewing this alert, please contact your CohnReznick professional for any assistance your hospital may need in complying with the CHNA requirements and any related excise tax and reporting obligations.
 
Issue:
 
Section 501(r), added to the Internal Revenue Code by the Patient Protection and Affordable Care Act (Public Law 111-148), provides several additional requirements that hospitals must satisfy to be tax-exempt under section 501(c)(3). Included is a requirement that hospitals conduct a CHNA every three years and adopt an implementation strategy to meet the community health needs identified through the assessment. The CHNA requirements are effective for tax years beginning after March 23, 2012. Notice 2011-52 provides interim guidance on the CHNA requirements and related excise tax and reporting obligations. 
 
A CHNA is considered as being conducted in the tax year that the written report of its findings is made widely available to the public. An implementation strategy is considered as being adopted on the date the strategy is approved by an authorized governing body of the hospital. Hospitals must adopt an implementation strategy to meet the community needs identified in a CHNA by the end of the tax year in which the CHNA is conducted. The CHNA must:
 
(1) Take into account input from persons who represent the broad interests of the community served by the hospital facility, including those with special knowledge of, or expertise in, public health; and
 
(2) Be made widely available to the public. 
 
What are Hospitals Required to Report?
 
Hospitals are required to report on Form 990 the amount of any excise tax imposed on it, a description of how the hospital is addressing the needs identified in each CHNA, and a description of any needs that are not being addressed together with the reasons why the needs are not being addressed. Questions relating to the CHNA requirements and the excise tax are included on Schedule H (Form 990), Hospitals. Responses to the questions are required for tax years beginning after March 23, 2012.
 
Contact:
 
Please visit CohnReznick’s Healthcare Industry webpage and contact Thomas Lanning, Partner, at 646-834-4108 or Phil Royalty, Director, at 916-930-5222.

 

Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.
 
This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
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