In a Private Letter Ruling (“PLR”), issued July 5, 2011, the Internal Revenue Service (“IRS”) reviewed an application for recognition of exemption from Federal income tax under IRC Section 501(c)(3) and denied tax-exempt standing to a hospital controlled organization formed with its medical staff members to participate in provider networks and contract with commercial payors to provide hospital and medical staff services.

On October 20, 2011, the federal government released final rules for the formation and operation of accountable care organizations (ACOs) under the Medicare Shared Savings Program (MSSP).  ACOs represent a key component of the Patient Protection and Affordable Care Act, the healthcare reform legislation enacted in 2010.  In connection with the release of the final rules by the Centers for Medicare and Medicaid Services (CMS), the Internal Revenue Service (IRS) issued a new Fact Sheet (FS-2011-11), “Tax-Exempt Organizations Participating in the Medicare Shared Savings Program through Accountable Care Organizations,” that provides additional information for IRC Section 501(c)(3) organizations, such as tax-exempt hospitals, that will be participating in the MSSP through an ACO.

On July 7, 2011, the Internal Revenue Service (“IRS”) and the United States Treasury (“the Treasury”) issued guidance in Notice 2011-52 designed to help tax-exempt hospitals and health systems comply with the community health needs assessment (“CHNA”) requirements applicable to hospital organizations described in IRC Section 501 (c)(3) of the Internal Revenue Code (“the Code”).

Recently, the Internal Revenue Service (“IRS”) Exempt Organizations (“EO”) division released their FY 2011 Workplan.  Within the body of the 29 page document, the IRS EO identified five overreaching IRS focus areas:

1. Impact of Recent Legislation
2. International Focus
3. Medical Residents
4. National Research Program – Study of Employment Tax Returns
5. Non-filer Initiatives