March 6, 2008 | Read Time: 1 minute
In a letter to a trustee at NewYork-Presbyterian Hospital, an official at the Internal Revenue Service has clarified what standards hospitals must follow to prove they are serving the public, often called a “community benefit” standard.
Eric Solomon, an assistant secretary for tax policy, wrote that hospitals can do several things to qualify for tax-exempt status, including admitting poor people for both regular and emergency-room care, training new doctors and nurses, or engaging in medical research.
The IRS will also take into account whether members of hospitals’ boards of directors are truly independent from the hospital and its financial interests and also the perks and privileges that medical staff members receive.
Those standards are used in the recently revamped Form 990 federal informational tax form. Revisions on Schedule H, a section of the form that hospitals fill out, altered what they can count as “charitable care.”
In a departure from the current 990, hospitals can no longer count certain types of debt, nor shortfalls on payments they should have received from Medicare. However, hospitals can report those two items on separate places on Schedule H and argue that they should count.
