06/13/2024

IRS Planning More Audits of Tax-exempt Hospitals

The agency wants to ensure they're providing 'community benefit'

The Internal Revenue Service (IRS) will audit dozens of tax-exempt hospitals this year, according to agency officials, as scrutiny of certain types of tax-exempt organizations continues on Capitol Hill.

According to Bloomberg, Robert Malone, director of exempt organizations and government entities at the IRS, confirmed last week that the agency intends to open at least 35 audits in fiscal year 2024 to determine if hospitals are providing “community benefit” as required to retain tax-exempt status.

Why it matters: Tax-exempt hospitals account for roughly 60% of hospitals in the U.S. Lawmakers serving on both House Ways and Means Committee and Senate Finance Committee have called on the IRS to investigate tax-exempt hospitals’ potential noncompliance over the past year.

House Ways and Means Committee Chairman Jason Smith (R-MO) has questioned whether the level of community benefit, including charity care, provided by tax-exempt hospitals justifies the value of their tax-exemption. Smith also said the executive compensation at tax-exempt hospitals is “particularly alarming."

This article was provided to OSAP by ASAE's Power of Associations and Inroads.