Health Care and Life Sciences > Health Reform Resource Center > TIGTA Report Examines IRS Implementation of ACA Tax Provisions
30 Sep '11

In a recent report, the Treasury Inspector General for Tax Administration (TIGTA) audited Internal Revenue Service (IRS) efforts to implement the Affordable Care Act (ACA) tax provisions. The report found that:

The IRS has revised Form 990 Schedule H to require hospitals to report on their financial assistance policies and community health benefits as required to maintain tax-exempt status under the ACA.  The ACA requires the IRS to review at least once every three years the community benefit activities of tax-exempt hospitals subject to these new exemption requirements and the IRS expects to complete reviews of the activities of 1,700 hospitals by the end of calendar year 2011 out of the approximately 5,100 hospitals subject to the new tax-exemption requirements.  

Also, in consultation with the Department of Health and Human Services (DHHS), the IRS is required to provide annual reports to Congress on (i) the levels of charity care, bad debt expenses, and unreimbursed costs for services provided under government programs by private tax-exempt, government-owned, and taxable hospitals and (ii) costs incurred by private tax-exempt hospitals for community benefit activities.  The TIGTA report indicates that the IRS is starting to collect some of this information for private tax-exempt hospitals from the revised Form 990 Schedule H, but the IRS is exploring the need to enter into a memorandum of understanding with DHHS to help clarify data responsibilities regarding the preparation of this report.  The TIGTA report does not mention that such a memorandum of understanding may be needed because the IRS currently does not have any mechanism to collect such data with regard to government-owned and taxable hospitals.