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Washington Highlights

IRS Issues Notices for Tax-exempt Hospitals

January 10, 2014— The Internal Revenue Service (IRS) Dec. 30 issued two notices designed to help 501(c)(3) hospitals comply with Section 501(r) of the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152).

IRS Notice 2014-2, Reliance on Proposed Regulations for Tax-exempt Hospitals, states that “tax-exempt hospital organizations can rely on proposed regulations under §501(r) contained in notices of proposed rulemaking…pending the publication of final regulations or other applicable guidance.”  The proposed regulations implement provisions of the ACA that require 501(c)(3) hospitals to conduct community health needs assessments and other ACA requirements that already are in effect.

The IRS also issued Notice 2014-3, Proposed Procedures for Charitable Hospitals to Correct and Disclose Failure to Meet §501(r), which includes a proposed revenue procedure to address instances when a hospital does not meet the requirements of §501(r), but corrects and discloses the failure.

The IRS will consider corrections and disclosures according to the requirements in the revenue ruling, which may “tend to indicate that an error or omission may not have been willful or egregious.”  Comments on the proposed revenue ruling must be submitted by March 14, 2014.

Ivy Baer, J.D., M.P.H.
Senior Director and Regulatory Counsel
Telephone: 202-828-0499


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806