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
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