IRS to block hospitals from filing group tax return

An Internal Revenue Service (IRS) advisory committee has recommended blocking tax-exempt organizations from filing a single tax return for all of its affiliates--a change that could make it far more complicated for hospitals to report on their operations, reports AHA News Now.

The IRS' Advisory Committee on Tax Exempt and Government Entities suggested the change because it believed that filing a single 990 Form tax return did not provide enough transparency or accountability.

Many not-for-profit hospitals report on one or more affiliated organizations in their tax returns, filing a Schedule H form. Most are home healthcare and nursing home arms, which can provide substantial earnings to the parent entity. However, individual expenses and compensation for executives running these arms often go unreported.

AHA officials argue that the change would be both burdensome and redundant. "The current Schedule H requires reporting at the facility level, which is much deeper than the 'affiliated entity' level. It makes little sense for any organization since the new 990 is so detailed regarding relationships among related organizations," said AHA General Counsel Melinda Hatton.

For more information:
- here's the IRS recommendation (.pdf)
- read the AHA News Now brief

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