The IRS today released an advance copy of Rev. Proc. 2015-21, setting forth guidance regarding correction and disclosure procedures for hospital organizations to follow so that certain failures to meet the requirements of section 501(r) will be excused.
The regulations under section 501(r) provide rules whereby a hospital facility will not lose its tax-exempt status due to a failure to meet the requirements of section 501(r) if such failure was not willful or egregious and was corrected and disclosed in accordance with further guidance to be issued by the government.
Rev. Proc. 2015-21 [PDF 44 KB] provides such guidance, adopting—with certain changes—the proposed guidance set forth in Notice 2014-3.
Under Rev. Proc. 2015-21, a “correction” must be made in accordance with the following principles:
The revenue procedure provides several examples of correction.
A failure is “disclosed” by providing the following information the hospital organization’s Form 990, Return of Organization Exempt from Income Tax, for the tax year in which the failure is discovered:
Changes from the proposed guidance include the following:
A hospital organization may use the provisions of the revenue procedure, if contacted by the IRS regarding an examination of the organization, if correction has begun and disclosure has occurred (unless the hospital organization’s Form 990 is not yet due).
Rev. Proc. 2015-21 is effective on and after March 10, 2015. In addition, a hospital organization will be considered to have corrected and made disclosure if it corrected and disclosed a failure falling within the scope of this revenue procedure or Notice 2014-3 in a manner consistent with this revenue procedure or in accordance with Notice 2014-3 prior to March 10, 2015.
Rev. Proc. 2015-21 will be published in Internal Revenue Bulletin 2015-13 on March 30, 2015.
For more information, contact:
Rick Speizman | +1 (202) 533-3084 | firstname.lastname@example.org
© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.