On January 6, 2014, the IRS released a memo called “Notice 2014-2” to clarify a few points of 501(r). As a reminder, 501(r) is made up of 6 sections that are guidelines that not-for-profit hospitals are expected to follow in order to maintain their tax-exempt 501c (3) status.
For more information on sections 501(r) 3 through 6, please view our short, 3-minute tutorial videos:
- 501(r) Section 3 Community Health Needs Assessment (CHNA)
- 501(r) Section 4 Financial Assistance Policy
- 501(r) Section 5 Setting Limits on Charges
- 501(r) Section 6 Extraordinary Collections Actions (ECAs)
The purpose of the memo was to let not-for-profit hospitals know that they are expected to rely on all 501(r) regulations as that were published between June 2012 and April 2013. In particular, the Community Health Needs Assessment (CHNA) is expected to have been completed by all not-for-profit hospitals at this time.
Hospitals will be audited on their CHNA effective the first taxable year after March 23, 2012. However, all not-for-profit hospitals should comply with all 501(r) statutory requirements already in effect.