Today, the Oversight Subcommittee of the House Ways and Means Committee heard testimony from several non-profit organization representatives on the current state of reporting requirements for tax-exempt institutions, and non-profit hospitals lobbied for a simpler, less burdensome Schedule H on the Form 990.
U.S. Rep. Charles Boustany, MD (R-La.), led the hearing as chairman of the Oversight Subcommittee with the intent of examining "the state of the tax-exempt sector, as it currently exists today, and consider this information as we continue the Committee's efforts toward comprehensive tax reform."
Michael Regier, JD, senior vice president of legal and corporate affairs, general counsel and compliance officer for VHA, expressed concern in his opening comments, saying non-profit hospitals and health systems have to take on massive compliance burdens when filling out their Form 990 and the revised Schedule H.
For example, Schedule H now requires hospitals to provide a community health needs assessment every three years, and for health systems with multiple hospitals, they are requiring to fill out different assessments, hospital-by-hospital. Mr. Regier said these types of regulations create "silos" of reporting requirements in an age when organizations are trying to be more efficient.
"VHA supports efforts to make the tax code fairer, simpler and more efficient," Mr. Regier said. "Even tax-exempt organizations spend millions of dollars to comply with IRS documentation and filing requirements. It's imperative to find that 'sweet spot' where the IRS can effectively perform its important oversight function while not requiring unnecessary paperwork."
Other witnesses agreed with Mr. Regier, reiterating that tax filings can become burdensome across all sectors of the non-profit world. However, the Internal Revenue Service instituted the new reporting requirements for non-profit organizations to provide a heightened sense of transparency and evidence that the organizations are providing benefits to their local communities.
"One of the problems is too much information, but I also think it's a problem the IRS is trying to work out by continually revising the Form 990," said Roger Colinvaux, JD, associate professor specializing in tax law at the Catholic University of America. "Complexity of the form is absolutely correct — but complexity is reflecting the complexity of the sector."
A recent report from the American Hospital Association and Ernst & Young found that non-profit, tax-exempt hospitals spend an average of 11.3 percent of their total annual expenses on community benefits. VHA, a voluntary association of more than 1,400 non-profit hospitals in the United States, represents many of those tax-exempt hospitals. In his testimony, Mr. Regier urged the Oversight Subcommittee to consider the three core benefits of tax-exempt hospitals before taking action on future tax reforms — income tax exemption for charitable hospitals, tax-exempt financing for hospital facilities and deduction of charitable contributions and bequests for hospital donors.
"We are asking Congress to ensure new requirements are not unduly burdensome and do not go beyond Congressional intent," Mr. Regier said. "We have to keep in mind that the work of these charitable organizations contributes significantly to the public good and lessens the burden of government."
U.S. Rep. Charles Boustany, MD (R-La.), led the hearing as chairman of the Oversight Subcommittee with the intent of examining "the state of the tax-exempt sector, as it currently exists today, and consider this information as we continue the Committee's efforts toward comprehensive tax reform."
Michael Regier, JD, senior vice president of legal and corporate affairs, general counsel and compliance officer for VHA, expressed concern in his opening comments, saying non-profit hospitals and health systems have to take on massive compliance burdens when filling out their Form 990 and the revised Schedule H.
For example, Schedule H now requires hospitals to provide a community health needs assessment every three years, and for health systems with multiple hospitals, they are requiring to fill out different assessments, hospital-by-hospital. Mr. Regier said these types of regulations create "silos" of reporting requirements in an age when organizations are trying to be more efficient.
"VHA supports efforts to make the tax code fairer, simpler and more efficient," Mr. Regier said. "Even tax-exempt organizations spend millions of dollars to comply with IRS documentation and filing requirements. It's imperative to find that 'sweet spot' where the IRS can effectively perform its important oversight function while not requiring unnecessary paperwork."
Other witnesses agreed with Mr. Regier, reiterating that tax filings can become burdensome across all sectors of the non-profit world. However, the Internal Revenue Service instituted the new reporting requirements for non-profit organizations to provide a heightened sense of transparency and evidence that the organizations are providing benefits to their local communities.
"One of the problems is too much information, but I also think it's a problem the IRS is trying to work out by continually revising the Form 990," said Roger Colinvaux, JD, associate professor specializing in tax law at the Catholic University of America. "Complexity of the form is absolutely correct — but complexity is reflecting the complexity of the sector."
A recent report from the American Hospital Association and Ernst & Young found that non-profit, tax-exempt hospitals spend an average of 11.3 percent of their total annual expenses on community benefits. VHA, a voluntary association of more than 1,400 non-profit hospitals in the United States, represents many of those tax-exempt hospitals. In his testimony, Mr. Regier urged the Oversight Subcommittee to consider the three core benefits of tax-exempt hospitals before taking action on future tax reforms — income tax exemption for charitable hospitals, tax-exempt financing for hospital facilities and deduction of charitable contributions and bequests for hospital donors.
"We are asking Congress to ensure new requirements are not unduly burdensome and do not go beyond Congressional intent," Mr. Regier said. "We have to keep in mind that the work of these charitable organizations contributes significantly to the public good and lessens the burden of government."
More Articles on Non-Profit Hospitals and Tax-Exempt Statuses:
AHA Asks IRS to Update Private-Use Rules for Healthcare Facilities
AHA to IRS: Let us Decide How to Assess Community Health
Illinois to Resume Reviews of Non-Profit Hospitals' Tax-Exempt Statuses