Heal Thyself: A Look at Audits of Hospital Organizations Under Section 501(r)

affordable care act, tax, 5901(r)Love it or loathe it, the Affordable Care Act brought big changes to health care.

One of those changes has not received the attention it deserves. The act amended section 501 of the Internal Revenue Code to impose certain specific requirements on “hospital organizations,” which are exempt organizations that operate one or more facilities that are “required by a State to be licensed, registered, or similarly recognized as a hospital.” I.R.C. § 501(r)(2)(A)(i).

The fact that these requirements are included in section 501 of the Code is significant, as it means that a hospital organization needs to comply to maintain tax-exempt status.… Read More

Tax Refund Claims: ACA Reinsurance Mandate Payments Are Not Taxes that Can Be Recovered through a Refund Action

Affordable care act, taxWhat is a tax? The Supreme Court has indicated that taxes are “pecuniary burdens laid upon individuals or their property, regardless of their consent, for the purpose of defraying the expenses of government or of undertakings authorized by it.” New York v. Feiring, 313 U.S. 283, 285 (1941). But the label that Congress applies counts too; that means something that looks like a tax may not be treated like a tax because Congress chose to call it something else. This point is illustrated by a recent district court case decided under the Affordable Care Act, which held that a mandatory reinsurance contribution imposed upon a self-funded, self-administered group health plan was not a tax recoverable through a refund action.… Read More