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Belmont Health Law Journal

Abstract

This Note proceeds in four parts. Part I steps back and takes a brief look at the history and background of federal tax law; specifically, as it relates to the hospital-specific requirements the IRS has placed on hospitals seeking to qualify or maintain taxexempt status over the years. Additionally, Part I discusses the incorporation and implementation of Section 501(r) into the Internal Revenue Code (“IRC”). Part II then explores the IRS’ enforcement of Section 501(r), including the IRS’ 2017 decision to revoke a “dual status” hospital’s tax-exempt status for non-compliance. Then, Part II will conclude by explaining how tax-exempt hospitals can ensure they are in compliance with Section 501(r) and do not experience this same fate. Part III discusses the ripple effects of the IRS’ revocation action; the potential effects of such an action on similarly situated hospitals; and whether the IRS’ revocation action signals a change in the way Congress views—and the IRS enforces—hospital tax-exemption. Finally, Part IV of this Note considers whether Section 501(r) goes far enough to address the problems with the current system. Part IV will then conclude by presenting a brief argument for why Section 501(r) is a step in the right direction, and, with the implementation of a few small changes, can do even better.

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