CHNA & implementation strategy deadlines extended for exempt hospitals
TAX ALERT |
In response to the COVID-19 pandemic, the IRS issued Notice 2020-56 to further postpone, until Dec. 31, 2020, the deadline for performing any CHNA requirement due to be completed on or after April 1, 2020, and before Dec. 31, 2020.
To retain its exempt status under section 501(c)(3), a tax-exempt hospital must satisfy the requirements of section 501(r), including, under section 501(r)(3), the requirement to conduct a community health needs assessment (CHNA) at least once every three years and adopt an implementation strategy to meet the community health needs identified through the CHNA.
The CHNA must be conducted by the end of the third taxable year, and the implementation strategy must be adopted by the 15th day of the fifth month after the end of the tax year in which the hospital facility conducts its CHNA. Failure to meet either or both of these requirements may result in the imposition of a $50,000 excise tax under section 4959.
Under Notice 2020-23, the IRS postponed, until July 15, 2020, the deadline to conduct a CHNA or adopt an implementation strategy due on or after April 1, 2020, and before July 15, 2020.
Pursuant to Notice 2020-56, any hospital organization required to conduct a CHNA or adopt an implementation strategy on or after April 1, 2020, and before Dec. 31, 2020, is determined to be an “Affected Taxpayer” and permitted to postpone the deadline to Dec. 31, 2020.
For purposes of determining the due date of the implementation strategy, taxpayers should use the original due date, without regard to this postponement. For example, if a taxpayer was required to conduct a CHNA by April 30, 2020, the original due date of the taxpayer’s implementation strategy would be Sept. 15, 2020. Under Notice 2020-56, both the CHNA and implementation strategy must be completed by Dec. 31, 2020.
Form 990, Schedule H
In a news release, the IRS clarified how tax-exempt hospitals should timely file Forms 990 prior to Dec. 31, 2020, if they would otherwise need to complete Schedule H, Part V for a CHNA. Specifically, these hospitals should state in the narrative of Part V, Section C that they are eligible for and are relying on the relief provided in Notice 2020-56 and should not be treated as failing to meet the requirements of section 501(r)(3) prior to Dec. 31, 2020.