IRS eases rules for physician representation on governing boards

In September 1996, the IRS eased its policy prohibiting extensive physician representation on governing boards of tax-exempt integrated delivery systems (IDSs). The IRS now allows increased physician participation on governing boards if the organizations institute conflict-of-interest safeguards that prohibit physicians from obtaining private inurements. A section of the Internal Revenue Code, enacted in 1996 by the Taxpayer Bill of Rights 2, strengthens the IRS's enforcement policy by providing targeted sanctions against individual violators of the private inurement rule rather than penalizing entire IDSs and the communities they serve by revoking their tax-exempt status.