IRS Provides Additional COVID-19 Relief for Tax-Exempt Hospitals

July 15, 2020

The IRS has recently announced that due to the COVID-19 pandemic it will provide additional relief to hospital organizations that must meet the Community Health Needs Assessments (CHNA) requirements.

The IRS has issued Notice 2020-56, which extends the deadline for conducting a CHNA and adopting an implementation strategy to meet the community health needs identified through the CHNA to Dec. 31, 2020.

Tax-exempt hospital organizations filing Forms 990 must indicate on Schedule H if they have conducted a CHNA in the current taxable year or in either of the two immediately preceding taxable years, as well as if they have adopted an implementation strategy to meet the significant health needs identified through the most recently completed CHNA. Since these requirements may affect the hospital’s tax-exempt status and because the law imposes a $50,000 tax on a hospital organization for each hospital facility that fails to meet either or both of these requirements, the extension provided in the notice provides significant relief.

Under the notice, the time for hospitals to comply with any CHNA requirements due to be performed on or after April 1, 2020 and before Dec. 31, 2020 is extended to Dec. 31, 2020. Previously, the IRS issued guidance extending the due date to July 15, 2020.

The IRS states that hospitals using the relief that file Form 990 prior to Dec. 31, 2020 should state in the narrative of Part V.C. of Schedule H that they are eligible for and are relying on the relief provided in the notice and should not be treated as failing to meet the requirements of section 501(r)(3) prior to Dec. 31, 2020.