Providers ask Congress for tax relief for COVID-19 assistance

Capital building
A slew of provider groups are asking Congress to exempt relief funding for COVID-19 from taxation. (Image: Pixabay)

A slew of major provider groups is imploring Congress to exempt tax deductions for COVID-19 federal relief funds they are using to keep afloat.

The groups that include the Federation of American Hospitals, American Medical Association and American Hospital Association sent a letter to both House and Senate leadership Thursday asking for tax relief as they face a cash crunch caused by the pandemic.

“The congressional response to the COVID-19 pandemic has been swift and decisive,” the letter said. “It is critical that the actions taken to support front-line caregivers and hospitals are not diluted by technical issues around the taxability of support funds.”

Product Spotlight

Top-Rated Mobile App for Health Insurance Members

Zipari’s Mobile App is the smarter, easier, and better way for payers to engage members on the go and directly in the palm of their hands. Members can find the right doctors, receive notifications, send messages, view claims, track spending, talk to a nurse, download ID card, and more. It’s ready to install and launch in a few months.

Congress has passed $175 billion in funding to help providers offset major losses from declining patient volume and the cancellation of surgical procedures.

RELATED: Health systems find federal relief payments only cover one week of lost revenue: survey

But government payments to corporations are generally considered taxable, the providers said.

Lawmakers included a provision in the CARES Act that exempts funds given out under the Paycheck Protection Program (PPP) from taxation. But Congress “inadvertently failed to protect the ability for entities receiving PPP funds from maintaining their tax deductions for expenditures attributable to PPP funds.”

A House bill called the HEROES Act passed last month corrects this, but the massive $3 trillion stimulus package has stalled in the Senate. Now providers want a similar clarification for the relief funds, which are still being distributed by Health and Human Services.

The groups want to ensure that the relief money is not taxable and that entities getting these funds can “maintain tax deductions attributable to these funds.”

The provisions should be enacted together to not have the same problem that was experienced under the PPP.

“Without such a correction, tax-paying healthcare providers lose at least 21% of the benefit of these funds and are treated unequally as compared to non-tax-paying providers,” the letter said.

RELATED: FAH to Senate: Pass more funding for providers now, change advance payment program

It remains unclear when, if ever, Congress will approve more COVID-19 legislation. While there is bipartisan support for the PPP clarification, the HEROES Act has not been taken up in the Senate.

Several Senate Republicans have said they want to see how the initial $3 trillion in funding passed at the onset of the pandemic is distributed and affecting businesses.

Other groups that signed on to the letter were the American College of Physicians, U.S. Chamber of Commerce, Premier Healthcare Alliance and American Academy of Family Physicians.

Suggested Articles

President Donald Trump issued an executive order Monday to support healthcare in rural areas by permanently expanding telehealth services.

Tenet generated $88 million in profits in the second quarter thanks in part to more than $850 million in aid from a federal provider relief fund.

Ancestry gots its start in geneology. Now the company is expanding into more advanced genetic health screening.