June 29, 2006 | Read Time: 1 minute
TAX WATCHBy Elizabeth Schwinn
The Internal Revenue Service has begun looking into how well nonprofit hospitals are complying with federal law requiring them to provide social benefits, such as free or low-cost health care for the poor, in exchange for their tax-exempt status.
The tax agency has sent “compliance check” surveys to 550 nonprofit hospitals, asking them to state how much subsidized care they provide and what programs they operate for the good of their local areas, including immunizations and health education.
The surveys also seek details about hospital operations, management, and executive pay.
The investigation comes amid continued scrutiny of nonprofit hospitals by Congress. The U.S. Senate and House of Representatives are looking into whether nonprofit hospitals provide sufficient services to warrant their exemption from taxes.
Sen. Charles E. Grassley, the Iowa Republican who is chairman of the Senate Finance Committee, urged the revenue service and the Treasury Department to use the results of the surveys to come up with new standards that nonprofit hospitals would have to meet to qualify for exemption.
The federal agencies “need to use the information received from the surveys to support changes to the current regulations and provide common rules and practices for providing charitable care and community benefit,” Mr. Grassley said.
Nonprofit hospitals say they already offer many free or reduced-cost benefits to people in their areas, and that requiring them to provide more could drive some of the hospitals into bankruptcy.
