Ann. 2011-37, 2011-27 IRB
In an Announcement, IRS has advised tax-exempt organizations that operate one or more hospital facilities (“hospital organizations”) that Part V, Section B (“Part V.B”) of Schedule H, Hospitals, of the 2010 Form 990, “Return of Organization Exempt From Income Tax,” is optional for the 2010 tax year. However, a hospital organization that is required to file the 2010 Form 990 must complete all other sections of the 2010 Schedule H, including Sections A and C of Part V, and attach its most recent audited financial statements to the 2010 Form 990 if its tax year began after Mar. 23, 2010.
Background. Most tax-exempt organizations annually file a Form 990 with IRS to report information about their operations. It consists of a core form that must be completed by each Form 990 filer and 16 schedules designed to require reporting of information from those organizations that conduct particular activities, including a Schedule H for hospitals. Form 990-series information returns are due on the 15th day of the fifth month after an organization's fiscal year ends.
Sec. 9007 of the Patient Protection and Affordable Care Act (PPACA, P.L. 111-148) added Code Sec. 501(r), which sets out detailed new qualification requirements for Code Sec. 501(c)(3) organizations that operate at least one hospital facility, effective for tax years beginning after Mar. 23, 2010. These requirements include: adopting and implementing a written financial assistance policy, including the basis for calculating amounts charged to patients; adopting and implementing a nondiscriminatory policy to provide emergency medical treatment to individuals; limiting the amounts charged for emergency or other medically necessary care provided to individuals who are eligible for financial assistance to the amounts that insured individuals would generally be billed for such care; and meeting new requirements with regard to billing and collection. Also, for tax years beginning after Mar. 23, 2012, Code Sec. 501(r)(3) requires that hospital organizations conduct community health needs assessments.
New guidance. In Ann. 2011-37, IRS advised hospital organizations that Part V.B of Schedule H is optional for the 2010 tax year. IRS stated that it decided to give the hospital community more time to familiarize itself with the types of information that IRS would be collecting in order to comply with Sec. 9007 of PPACA and address any ambiguities arising from the extensive revisions of the form and its instructions. Included in Part V.B are questions regarding a hospital facility's community health needs assessment, financial assistance policy, billing and collections, and charges for medical care.
No penalties under Code Sec. 6652(c)(1)(A)(ii) (relating to an exempt organization's failure to include any information required to be shown on Form 990) will be assessed because any lines of Part V.B are left incomplete. If an affected hospital organization receives a Code Sec. 6652(c)(1)(A)(ii) penalty notice from IRS solely for not completing any line or lines of Part V.B for the tax year 2010, the hospital organization should call the telephone number on the penalty notice to request that IRS abate the penalty.
Comments sought. IRS stated that it continues to invite comments on how to improve the clarity and reduce the burden of reporting the additional information required by PPACA.
Delayed filing remains in effect. Ann. 2011-20, in which IRS directed hospital organizations not to file the 2010 Form 990 before July 1, 2011, and granted hospital organizations with return due dates prior to Aug. 15, 2011 an automatic three-month filing extension, remains in effect.
References: For additional requirements for charitable hospital organizations, see FTC 2d/FIN ¶D-4141.1 et seq.; United States Tax Reporter ¶5014.46; TaxDesk ¶670,614 et seq.; TG ¶60703. For tax-exempt organization's annual return Form 990, see FTC 2d/FIN ¶S-2801; United States Tax Reporter ¶60,334; TaxDesk ¶688,001; TG ¶20691.