The Law of Tax-Exempt Healthcare Organizations 2016 Supplement

THOMAS K. HYATT (Washington DC) is a Partner and the Chair of SNR Denton's Health Care practice. He focuses on corporate and tax-exempt organization issues for health care providers. He represents organizations including public and private hospitals, multi-hospital systems, integrated delivery systems, academic medical centers, home health agencies, health maintenance organizations, continuing care retirement communities, provider associations, physician clinics, faculty practice plans, physician-hospital organizations and shared services organizations. Tom is the Chair Emeritus and serves on the faculty of the annual Tax Issues in Healthcare Organizations seminar sponsored by the American Health Lawyers Association (AHLA), and past Chair of AHLA's Tax and Finance practice. BRUCE R. HOPKINS (Kansas City MO) is a senior partner with the firm Polsinelli Shughart PC. He is also the author of more than 35 books, including The Law of Tax-Exempt Organizations, 10e, The Law of Fundraising, 4e, Nonprofit Law for Colleges and Universities, Nonprofit Governance, and Nonprofit Law Made Easy, as well as the monthly newsletter Bruce R. Hopkins' Nonprofit Counsel, all published by Wiley. Hopkins earned his Juris Doctorate and Master of Laws degrees at the George Washington University. He has practiced law for 40 years and is a member of the District of Columbia and Missouri bars. Hopkins received the 2007 Outstanding Nonprofit Lawyer Award (Vanguard Lifetime Achievement Award) from the American Bar Association, Section of Business Law, and Committee on Nonprofit Corporations. He is listed in The Best Lawyers in America, Nonprofit Organizations/Charities Law, 2007-2008.

1 Tax-Exempt Healthcare Organizations An Overview 1 1.2 Defining Tax-Exempt Organizations 1 1.5 Charitable Healthcare Organizations 1 1.10 ABLE Programs 2 4 Private Inurement, Private Benefit, and Excess Benefit Transactions 5 4.4 Private Inurement Scope and Types 5 4.6 Essence of Private Benefit 6 4.9 Excess Benefit Transactions 7 5 Public Charities and Private Foundations 9 5.6 Recognition of Change in Public Charity Status 9 7 Lobbying and Political Activities 11 7.1 Legislative Activities Limitation 11 7.4 Political Activities Limitation 12 7.8 Political Activities of Social Welfare Organizations 12 9 Managed Care Organizations 15 9.5 Recent Developments 15 13 Other Provider and Supplier Organizations 19 13.3 Qualified Nonprofit Health Insurance Issuers 19 13.5 Accountable Care Organizations 20 16 For-Profit Subsidiaries 21 16.3 Attribution of Subsidiary s Activities to Exempt Parent 21 18 Business Leagues 23 18.1 Business Leagues in General 23 19 Other Health-Related Organizations 25 19.4 Hospital Management Services Organizations 25 20 Healthcare Provider Reorganizations 27 20.1 Some Basics About Reorganizations 27 21 Mergers and Conversions 29 21.4 Conversion from Nonexempt to Exempt Status 29 24 Tax Treatment of Unrelated Business Activities 31 24.2 Definition of Trade or Business 31 24.3 Definition of Regularly Carried On 33 24.12 Laboratory Testing Services 33 24.18 Other Exceptions to Unrelated Income Taxation 33 24.20 Revenue from Controlled Organizations 34 25 Physician Recruitment and Retention 35 25.5 Specific Recruitment and Retention Techniques 35 26 Charity Care 37 26.10 Additional Statutory Requirements for Hospitals 37 27 Worker Classification and Employment Taxes 51 27.7 Medical Residents and the Student Exception 51 28 Compensation and Employee Benefits 53 28.5 Overview of Employee Benefits Law 53 30 Tax-Exempt Bond Financing 55 30.3 Disqualification of Tax-Exempt Bonds 55 31 Fundraising Regulation 59 31.2 Federal Law Regulation 59 33 Governance 61 33.4A IRS Ruling Policy 61 34 Exemption and Public Charity Recognition Processes 65 34.1 Exemption Recognition Process 65 34.5 Public Charity Status 72 34.6 Group Exemption 72 34.8 Procedure Where Determination Is Adverse 73 34.9 Constitutional Law Aspects of Process 73 35 Maintenance of Tax-Exempt Status and Avoidance of Penalties 75 35.4 Redesigned Annual Information Return 75 35.5 Disclosure Requirements 75 35.6 IRS Disclosure to State Officials 76 36 IRS Audits of Healthcare Organizations 77 36.2 Audit Procedures 77 Index 81