The Law of Tax-Exempt Healthcare Organizations, 2018 Supplement (4^th Ed.)
Wiley Nonprofit Authority Series

The Law of Tax-Exempt Healthcare Organizations 2018 Supplement provides complete and comprehensive practitioner updates and analysis in a single volume. Tackling complex legal issues with plain-English explanations and the appropriate citations, this guide is a must-have resource for organizations and their advisors. The companion website provides extensive appendices for further reference, as well as helpful downloadable tables that facilitate a more efficient approach to practice.

Healthcare law is a complex field, and keeping up with the frequent changes to federal law is itself a full time job. This book eliminates the need for extended research time by collecting all of the newest and relevant guidelines into one place.

• Get up to date on the latest IRS forms, guidance, and procedures
• Interpret complex legal issues correctly and appropriately
• Reference relevant federal guidelines quickly and easily
• Access extensive appendices and tables to streamline application

As the field evolves and new issues arise, practitioners need a working knowledge of the legal implications behind organizational activities, structure, practices, and more. This most recent annual supplement to The Law of Tax-Exempt Healthcare Organizations is a must-have resource for anyone in the field.

Preface ix

About the Authors xi

Book Citations xv

1 Tax-Exempt Healthcare Organizations—An Overview 1

1.2 Defining Tax-Exempt Organizations 1

1.5 Charitable Healthcare Organizations 1

1.10 ABLE Programs 2

3 Public Charities and Private Foundations (New) 5

3.3 Commerciality Doctrine 5

4 Private Inurement, Private Benefit, and Excess Benefit Transactions 7

4.4 Private Inurement—Scope and Types 7

4.6 Essence of Private Benefit 8

4.9 Excess Benefit Transactions 10

5 Public Charities and Private Foundations 11

5.1 Public Institutions 11

5.6 Recognition of Change in Public Charity Status 11

7 Lobbying and Political Activities 13

7.1 Legislative Activities Limitation 13

7.4 Political Activities Limitation 14

7.5 Business Expense Deduction Rules and Political Activities 16

7.7 Public Policy Advocacy Activities 16

7.8 Political Activities of Social Welfare Organizations 169

9 Managed Care Organizations 19

9.3 Commercial-Type Insurance Providers 19

9.5 Recent Developments 19

13 Other Provider and Supplier Organizations 23

13.3 Qualified Nonprofit Health Insurance Issuers 23

13.5 Accountable Care Organizations 24

16 For-Profit Subsidiaries 29

 16.3 Attribution of Subsidiary’s Activities to Exempt Parent 29

17 Exempt and Nonexempt Cooperatives 31

17.1 Cooperative Hospital Service Organizations 31

18 Business Leagues 33

18.1 Business Leagues in General 33

18.2 Healthcare Trade Associations 34

19 Other Health-Related Organizations 35

19.4 Hospital Management Services Organizations 35

19.5 Regional Health Information Organizations 36

20 Healthcare Provider Reorganizations 37

20.1 Some Basics about Reorganizations 37

21 Mergers and Conversions 39

21.4 Conversion from Nonexempt to Exempt Status 39

22 Partnerships and Joint Ventures (New) 41

22.9 Whole-Hospital Joint Ventures 41

24 Tax Treatment of Unrelated Business Activities 43

24.2 Definition of Trade or Business 43

24.3 Definition of Regularly Carried On 45

24.5 Application of Substantially Related Test to Healthcare Organizations 46

24.11 Pharmacy, Medical Supplies, and Service Sales 47

24.12 Laboratory Testing Services 47

24.13 Medical Research 48

24.18 Other Exceptions to Unrelated Income Taxation 49

24.20 Revenue from Controlled Organizations 51

24.21 Unrelated Debt-Financed Income 51

24.23 Computation of Unrelated Business Taxable Income 51

25 Physician Recruitment and Retention 53

25.5 Specific Recruitment and Retention Techniques 53

26 Charity Care 55

26.6 Definitional and Reporting Issues 55

26.9 Charity Care and National Health Reform 56

26.10 Additional Statutory Requirements for Hospitals 56

27 Worker Classification and Employment Taxes 73

27.7 Medical Residents and the Student Exception 73

28 Compensation and Employee Benefits 75

28.3 Executive Compensation 75

28.5 Overview of Employee Benefits Law 75

28.6 Deferred Compensation in General 76

30 Tax-Exempt Bond Financing 81

30.3 Disqualification of Tax-Exempt Bonds 81

31 Fundraising Regulation 91

31.2 Federal Law Regulation 91

33 Governance 93

33.4A IRS Ruling Policy 93

34 Exemption and Public Charity Recognition Processes 97

34.1 Exemption Recognition Process 97

34.5 Public Charity Status 107

34.6 Group Exemption 107

34.7A Notice Requirements for Social Welfare Organizations (New) 107

34.8 Procedure Where Determination Is Adverse 109

34.9 Constitutional Law Aspects of Process 110

35 Maintenance of Tax-Exempt Status and Avoidance of Penalties 111

35.1 Material Changes 111

35.2A Modification of Tax Exemption (New) 113

35.4 Redesigned Annual Information Return 113

35.5 Disclosure Requirements 114

35.6 IRS Disclosure to State Officials 114

36 IRS Audits of Healthcare Organizations 115

36.2 Audit Procedures 115

Cumulative Table of Cases 121

Cumulative Table of IRS Revenue Rulings 131

Cumulative Table of IRS Revenue Procedures 135

Cumulative Table of IRS Private Letter Rulings 137

Cumulative Table of IRS Technical Advice Memoranda 143

Table of Chief Counsel Advice Memoranda 145

Cumulative Table of IRS General Counsel Memoranda 147

Table of Tax Reform Legislation 149

Cumulative Index 155

THOMAS K. HYATT (Washington DC) is a Partner and the Chair of SNR Denton's Health Care practice. He focuses on corporate and tax-exempt organization issues for health care providers. He represents organizations including public and private hospitals, multi-hospital systems, integrated delivery systems, academic medical centers, home health agencies, health maintenance organizations, continuing care retirement communities, provider associations, physician clinics, faculty practice plans, physician-hospital organizations and shared services organizations. Tom is the Chair Emeritus and serves on the faculty of the annual Tax Issues in Healthcare Organizations seminar sponsored by the American Health Lawyers Association (AHLA), and past Chair of AHLA's Tax and Finance practice.

BRUCE R. HOPKINS (Kansas City MO) is a senior partner with the firm Polsinelli Shughart PC. He is also the author of more than 35 books, including The Law of Tax-Exempt Organizations, 10e, The Law of Fundraising, 4e, Nonprofit Law for Colleges and Universities, Nonprofit Governance, and Nonprofit Law Made Easy, as well as the monthly newsletter Bruce R. Hopkins' Nonprofit Counsel, all published by Wiley. Hopkins earned his Juris Doctorate and Master of Laws degrees at the George Washington University. He has practiced law for 40 years and is a member of the District of Columbia and Missouri bars. Hopkins received the 2007 Outstanding Nonprofit Lawyer Award (Vanguard Lifetime Achievement Award) from the American Bar Association, Section of Business Law, and Committee on Nonprofit Corporations. He is listed in The Best Lawyers in America, Nonprofit Organizations/Charities Law, 2007-2008.