In response to the ongoing nature of the COVID-19 pandemic, on July 14, 2020, the Internal Revenue Service (IRS) issued Notice 2020-56, which provides additional time for tax-exempt hospital organizations to satisfy the Community Health Needs Assessment (CHNA) requirements. Specifically, the deadline for conducting a CHNA and adopting an implementation strategy to meet the community health needs identified through the CHNA due to be performed on or after April 1, 2020, and before December 31, 2020, has been extended to December 31, 2020.
This is the second time that the IRS has provided relief to hospital organizations that are required to meet the CHNA requirements under section 501(r)(3) of the Internal Revenue Code, as a result of the COVID-19 pandemic. On April 9, 2020, the IRS issued Notice 2020-23 that postponed until July 15, 2020, the deadline for performing any CHNA requirement that was due to be completed on or after April 1, 2020, and before July 15, 2020. Notice 2020-56 provides a further postponement of such CHNA requirements until December 31, 2020.
In order to maintain its tax-exempt status as a 501(c)(3) organization under the Internal Revenue Code, a hospital organization must conduct a CHNA at least once every three years and adopt an implementation strategy to meet the community health needs identified through the CHNA. For each hospital facility that fails to satisfy either or both of these requirements with respect to any taxable year, the hospital organization is subject to a $50,000 excise tax.
In order to take advantage of this relief being offered by the IRS and avoid being subject to the excise tax, hospitals that file Form 990 prior to December 31, 2020, should state in the narrative of Part V.C. of Schedule H (Form 990) that they are eligible for and are relying on the relief provided in Notice 2020-56, such that they should not be treated as failing to meet the requirements of section 501(r)(3) of the Internal Revenue Code prior to December 31, 2020.
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