What Hospital Organizations need to know about Form
990 Filing?
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IRS Form 990 Filing Requirements for Hospital Organizations
- Updated April 21, 2023 - 1.00 PM Admin, ExpressTaxExemptIRS recognizes the hospital organizations under the section 501(c)(3) as tax-exempt. This type of Organization does not pay income tax on its earnings or on the donations it receives. But the Organizations need to file the activities of the Organization
with the IRS.
This article further explores the requirements for activities of the Churches, applying for a tax-exempt status, filing requirements, and more.
Table of Content
1. What are hospitals?
A hospital is a medical facility that provides medical help and support to the public. The hospitals are considered as section 501(c)(3) organizations if they meet the requirements of section 501(c)(3) of the IRS. Just like all other section 501(c)(3) organizations, hospitals must also be organized and operated exclusively for one or more tax-exempt purposes. The non-profit hospitals are usually funded by religious, charity and educational funds.
The net earnings of the hospital must not be used for the benefit of any individual or a shareholder. The hospitals must not interfere in any political activities and lobbying should not be considered as an important purpose for these organizations. The documents and assets of the organization should be distributed for charitable purposes if the hospital is dissolved or going out of business.
The primary purpose of a section 501(c)(3) tax-exempt organization should be scientific, literary, educational, religious, or charitable. Medical or health-related services are not included in these purposes. But a hospital can still be considered as a section 501(c)(3) organization if the hospital provides support to a large number of people enough to benefit a whole community. This is known as the community benefit standard. The hospitals should also be organized and operated to serve a public interest.
2. Examples of Hospitals
Not all hospitals will be considered as tax-exempt under section 501(c)(3) of the IRS. Private hospitals that operate for the profits and government hospitals cannot be considered as tax-exempt organizations. The hospital must be a non-profit corporation and operate for the benefit of the public rather than making profits for it to be exempt from taxes under section 501(c)(3). These hospitals must also meet the requirements of the community benefit standard.
3. Unique Non-profit activities
Non-profit hospitals must operate and provide medical support for a class of people that is enough to benefit a community. This is called a community benefit standard and the hospitals have to meet these standards to be considered as a non-profit organization. These standards include:
Open Emergency Room
The hospitals are required to operate an open emergency room that should be open for everyone regardless of their financial status. This is a very important factor in the community benefit standards which need to be met at all costs. The hospitals must also operate the emergency room all the time to meet the needs of the community’s emergency medical care. It is not necessary for the hospitals that specialize in certain conditions, like eye or cancer hospitals to maintain an open emergency room.
Board of Directors from the Community
The hospitals must contain a board of directors which should include and be governed by the members of the community. The hospital’s medical and administrative staff can also be a part of this board, but should not be able to govern the board.
Open Medical Staff Policy
The hospital must not restrict hiring medical staff to only a limited group of physicians.
Medical Care for all
The hospitals are required to offer medical benefits to all the patients irrespective of their financial status. The hospital should also admit patients who pay through public programs such as Medicare and other health insurance.
Funds and donations
The hospitals are allowed to receive a surplus amount of donations and funds. These contributions should be used exclusively to improve the facilities and equipment of the hospital or to advance medical training, education and research.
4. 990 Filing requirements for Hospital Organizations
A hospital is considered as a public charity and needs to be approved by the IRS under section 501(c)(3) to file the Form 990 series. The hospital has to file Form 1023 with the IRS for it to be eligible for the tax-exempt status. The sports club will receive a determination letter from the IRS which recognizes its tax-exempt status. Organizations that are operated as one or more hospital facilities during the tax year must file only Form 990 (Long Form).
All hospitals are required to file Form 990 (Long Form) irrespective of their gross receipts. The organizations are required to attach a Schedule H along with their Form 990 to provide information about the activities, policies, and community benefits offered by the hospital.
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