For the latest information about developments related to Form 990 and its instructions, such as legislation enacted after they were published, go to www.irs.gov/form990.
The Patient Protection and Affordable Care Act (Affordable Care Act), enacted March 23, 2010, Pub. L. No. 111-148, added section 501(r) to the Code. Section 501(r) includes additional requirements a hospital organization must meet to qualify for tax exemption under section 501(c)(3) in tax years beginning after March 23, 2010. These additional requirements address a hospital organization's financial assistance policy, policy relating to emergency medical care, billing and collections, and charges for medical care. Also, for tax years beginning after March 23, 2012, the Affordable Care Act requires hospital organizations to conduct community health needs assessments.
Because section 501(r) requires a hospital organization to meet these requirements for each of its hospital facilities, Part V, Facility Information, has been expanded to include a Section A, Hospital Facilities. In this new section a hospital organization must list its hospital facilities; that is, its facilities that at any time during the tax year, were required to be licensed, registered, or similarly recognized as a hospital under state law. Part V also includes Section B, Facility Policies and Practices, for reporting of information on policies and practices addressed in section 501(r). The hospital organization must complete a separate Section B for each of its hospital facilities listed in Section A.
The community health needs assessment requirements of section 501(r)(3) are effective for tax years beginning after March 23, 2012. Accordingly, the questions in Part V, Section B, about community health needs assessments (lines 1 through 8) are optional for any tax year beginning before March 24, 2012.
Section 6033(b)(15)(B) also requires hospital organizations to submit a copy of their audited financial statements to the IRS. Accordingly, a hospital organization that is required to file Form 990 must attach a copy of its most recent audited financial statements to its Form 990 (see instructions for Form 990, Part IV, line 20b).
Section C, Part V, requires an organization to list all of its non-hospital health care facilities that it operated during the tax year, whether or not such facilities were required to be licensed or registered under state law. The organization should not complete Part V, Section B, for any of these non-hospital facilities.
Hospital organizations use Schedule H (Form 990) to provide information on the activities and policies of, and community benefit provided by, its hospital facilities and other non-hospital health care facilities that it operated during the tax year. This includes facilities operated either directly or through disregarded entities or joint ventures.
An organization that answered “Yes” on Form 990, Part IV, line 20a must complete and attach Schedule H to Form 990.
Schedule H (Form 990) must be completed by a hospital organization that operated during the tax year at least one hospital facility. A hospital facility is one that is required to be licensed, registered, or similarly recognized by a state as a hospital. A hospital organization may treat multiple buildings operated under a single state license as a single hospital facility.
The organization must file a single Schedule H (Form 990) that combines information from:
Hospital facilities directly operated by the organization.
Hospital facilities operated by disregarded entities of which the organization is the sole member.
Other health care facilities and programs of the hospital organization or any of the entities described in 1 or 2, even if provided separately from the hospital's license.
Hospital facilities and other health care facilities and programs operated by any joint venture treated as a partnership, to the extent of the hospital organization's proportionate share of the joint venture.
Proportionate share is defined as the ending capital account percentage listed on the Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc., Part II, line J, for the partnership tax year ending in the organization's tax year being reported on the organization's Form 990. If Schedule K-1 (Form 1065) is not available, the organization can use other business records to make a reasonable estimate, including the most recently available Schedule K-1 (Form 1065), adjusted as appropriate to reflect facts known to the organization, or information used for purposes of determining its proportionate share of the venture for the organization's financial statements.
In the case of a group return filed by the hospital organization, hospital facilities operated directly by members of the group exemption included in the group return, hospital facilities operated by a disregarded entity of which a member included in the group return is the sole member, hospital facilities operated by a joint venture treated as a partnership to the extent of the group member's proportionate share (determined in the manner described in 4, earlier), and other health care facilities or programs of a member included in the group return even if such programs are provided separately from the hospital's license.
The organization is the sole member of a disregarded entity. The disregarded entity owns 50% of a joint venture treated as a partnership. The partnership in turn owns 50% of another joint venture treated as a partnership that operates a hospital and a freestanding outpatient clinic that is not part of the hospital's license. (Assume the proportionate shares of the partnerships based on capital account percentages listed on the partnerships' Schedule K-1 (Form 1065), Part II, line J, are also 50%.) The organization would report 25% (50% of 50%) of the hospital's and outpatient clinic's combined information on Schedule H (Form 990).
Note that while information from all the above sources is combined for purposes of Schedule H (Form 990), the organization is required to report each of its hospital facilities in Part V, Sections A and B, whether operated directly by the organization or through a disregarded entity or joint venture treated as a partnership. In addition, the organization must list in Part V, Section C, each of its other health care facilities (for example, rehabilitation clinics, other outpatient clinics, diagnostic centers, skilled nursing facilities, long-term acute care facilities that it operated during the tax year), whether operated directly by the organization or through a disregarded entity or a joint venture treated as a partnership.
Organizations are not to report information from hospitals located outside the United States in Parts I, II, III, or V. Information from foreign joint ventures and partnerships must be reported in Part IV, Management Companies and Joint Ventures. Information concerning foreign hospitals and facilities can be described in Part VI.
Except as provided in Part IV, do not report on Schedule H (Form 990) information from an entity organized as a separate legal entity from the organization and treated as a corporation for federal income tax purposes (except for members of a group exemption included in a group return filed by the organization), even if such entity is affiliated with or otherwise related to the organization (for example, part of an affiliated health care system).
If an organization is not required to file Form 990 but chooses to do so, it must file a complete return and provide all of the information requested, including the required schedules.
An organization that does not operate one or more facilities that satisfy the definition of hospital facility, above, should not file Schedule H (Form 990).
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