Tax-exempt yardstick: defining the measurements

Congress, the Internal Revenue Service (IRS), and state and local governments still are trying to determine requirements a hospital must meet to warrant tax exemption. Revisions to a bill introduced by Rep. Brian Donnelly (D-Mass.) likely will focus Congressional debate on whether charity care or the broader concept of community benefits is the most appropriate measure for not-for-profit hospitals to meet; the IRS may develop intermediate sanctions it could impose on errant not-for-profit facilities in lieu of a total revocation of tax-exempt status; and perhaps the most stringent clamp-down on healthcare facilities' tax-exempt status will come from state and local governments that develop boundaries for tax-exempt hospitals to maintain. Not-for-profit facilities can respond to increased scrutiny by viewing government challenges as opportunities to "tell their stories" about charity care and community benefits.