On April 3, 2013, the IRS released a proposed rule that provides guidance to charitable hospitals on Community Health Needs Assessments (CHNA) and related excise tax and reporting requirements imposed by §501(r), which is part of the Affordable Care Act. REG 106 499-12. Section 501(c)(3) hospitals are required, among many other §501(r) requirements, to conduct a CHNA every three years. The first CHNA’s will be required in 2013. The proposed rule clarifies the consequences of a hospital failing to satisfy the §501(r) requirements. A few of the many provisions in the proposed rule include the following:
- when §501(c)(3) status will be lost for failure to conduct a CHNA
- the application of the $50,000 excise tax for failure to conduct a CHNA
- where there is more than one hospital facility in a system, if one facility does not conduct a CHNA its income may be characterized as unrelated taxable business
- how hospitals must publicize the hospital’s CHNA
- how the hospitals implement a strategy to meet the healthcare needs identified in the hospital’s CHNA
Written comments must be made by July 5, 2013 and hearings will be held thereafter. This proposed guidance follows proposed guidance issued in June 2012 – REG 130266-1 that covered other requirements of §501(r).