Hospitals' search for solvency may change role of group ruling

The Group Ruling issued by the Internal Revenue Service (IRS) to the U.S. Catholic Conference (USCC) establishes the tax-exempt status of most organizations listed in The Official Catholic Directory (OCD). The USCC Group Ruling relieves individual organizations of the obligation of filing exemption applications and relieves the IRS of the burden of reviewing them. In addition to establishing exemption from federal income tax and federal employment tax, the Group Ruling establishes the deductibility of contributions to listed organizations for the purposes of income tax, gift tax, and estate tax. The USCC Group Ruling requires that subordinate entities be organized and operate exclusively for charitable, educational, or religious purposes; engage in only insubstantial lobbying; and not participate or intervene in a political campaign on behalf of or in opposition to a particular candidate. In addition, subordinates may not be private foundations, may not be organized in foreign countries, and may not possess independent IRS exemption determinations. Recently, the USCC has had to grapple with several issues that could affect inclusion in the Group Ruling and OCD. These include: Catholic organizations with individual IRS exemptions. Catholic healthcare reorganizations. For-profit subsidiaries. Hospital participation in joint ventures. Mergers by Catholic hospitals.