In recognition of their charitable contributions to the community, the Internal Revenue Service (IRS) does not require charitable organizations—such as libraries, museums, universities and non-profit hospitals—to pay federal income taxes, as described in Internal Revenue Code (IRC) Section 501(c)(3).
As a charitable organization, each hospital must promote health as its charitable purpose, measured by a community benefit standard. The IRS will consider any combination of the following factors, including whether the hospital:
- Operates a full-time emergency room that provides treatment regardless of ability to pay
- Provides non-emergency services to Medicare and Medicaid beneficiaries
- Has an open medical staff, consistent with the size and nature of the hospital
- Has a governing board that includes independent civic leaders drawn from the community
- Serves a broad cross section of the community through medical training, education and research programs
- Has a formal charity care policy
There is good news on the real estate tax exemption front for Ohio hospitals and other health care providers! The Ohio Tax Department has begun to apply the standards articulated in Dialysis Clinic, Inc. v. Levin, 2010-Ohio-5071 (decided in October of 2010) to clear the substantial backlog of pending hospital exemption applications. Read OHA’s whitepaper discussing the Recent Developments in Property Tax Exemption.
No related legislation.