The Law of Tax-Exempt Healthcare Organizations 2017 Cumulative Supplement + Website (eBook)

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.

Preface ix

About the Authors xi

Book Citations xv

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 8

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

7.5 Business Expense Deduction Rules and Political Activities 13

7.8 Political Activities of Social Welfare Organizations 13

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 25

16.3 Attribution of Subsidiary's Activities to Exempt Parent 25

17 Exempt and Nonexempt Cooperatives 27

17.1 Cooperative Hospital Service Organizations 27

18 Business Leagues 29

18.1 Business Leagues in General 29

19 Other Health-Related Organizations 31

19.4 Hospital Management Services Organizations 31

20 Healthcare Provider Reorganizations 33

20.1 Some Basics about Reorganizations 33

21 Mergers and Conversions 35

21.4 Conversion from Nonexempt to Exempt Status 35

24 Tax Treatment of Unrelated Business Activities 37

24.2 Definition of Trade or Business 37

24.3 Definition of Regularly Carried On 39

24.12 Laboratory Testing Services 40

24.18 Other Exceptions to Unrelated Income Taxation 40

24.20 Revenue from Controlled Organizations 40

24.23 Computation of Unrelated Business Taxable Income 41

25 Physician Recruitment and Retention 43

25.5 Specific Recruitment and Retention Techniques 43

26 Charity Care 45

26.10 Additional Statutory Requirements for Hospitals 45

27 Worker Classification and Employment Taxes 59

27.7 Medical Residents and the Student Exception 59

28 Compensation and Employee Benefits 61

28.5 Overview of Employee Benefits Law 61

28.6 Deferred Compensation in General 61

30 Tax-Exempt Bond Financing 65

30.3 Disqualification of Tax-Exempt Bonds 65

31 Fundraising Regulation 71

31.2 Federal Law Regulation 71

33 Governance 73

33.4A IRS Ruling Policy 73

34 Exemption and Public Charity Recognition Processes 77

34.1 Exemption Recognition Process 77

34.5 Public Charity Status 85

34.6 Group Exemption 85

34.7A Notice Requirements for Social Welfare Organizations (New) 85

34.8 Procedure Where Determination Is Adverse 87

34.9 Constitutional Law Aspects of Process 88

35 Maintenance of Tax-Exempt Status and Avoidance of Penalties 89

35.2A Modification of Tax Exemption (New) 90

35.4 Redesigned Annual Information Return 91

35.5 Disclosure Requirements 91

35.6 IRS Disclosure to State Officials 92

36 IRS Audits of Healthcare Organizations 93

36.2 Audit Procedures 93

Cumulative Table of Cases 97

Table of IRS Revenue Rulings 107

Cumulative Table of IRS Revenue Procedures 111

Table of IRS General Counsel Memoranda 113

Table of IRS Private Letter Rulings 115

Table of IRS Technical Advice Memoranda 121

Index 123