Tuesday, November 1, 2011

More on Oversight of IRS in its Regulation of Charities

The New York Times is reporting concern with the IRS in its regulation of tax-exempt charities under federal tax law.  One issue is the IRS’s delay in requiring tax-exempt hospitals to report on charity care.  Referring to the Illinois Department of Revenue’s revocation of property tax exemptions for property owned by nonprofit hospitals failing to provide sufficient charity care, the Times article says:

Those hospitals, however, remain exempt from federal taxes — a far bigger benefit — because the Internal Revenue Service is not collecting information to assess the extent of the care for poor and uninsured patients that nonprofit hospitals nationwide are supposed to provide.

To be fair to the IRS, the Times article does not quite have it right, insofar as the article seems to imply (wrongly) that the Illinois hospitals in question would necessarily witness revocation of federal income tax exemption if only the IRS had required proper reporting of charity care.   Moreover, as the article reports, Sarah Hall Ingram, Commissioner of the Tax Exempt and Government Entities Division of the I.R.S., attributed agency delay in finalizing the reporting requirements to “new federal health care legislation” (presumably a reference to the recently enacted section 501(r) of the Internal Revenue Code).   In any event, as noted in the article, the question of how the IRS is overseeing nonprofit hospitals is one recently posed of the agency by Charles W. Boustany Jr., Republican of Louisiana and a member of the House Ways and Means Committee.  (For previous blog coverage of Mr. Boustany’s letter to the IRS, see here.)

Other matters of concern reported in the Times article include the agency’s delay in issuing final regulations governing pay-out requirements for certain supporting organizations, and in further regulating donor-advised funds.



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