Hospitals Granted Relief: CHNA Deadlines Postponed

Thoughtware Alert Aug 04, 2020
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The IRS has issued Notice 2020-56 to give additional relief to hospitals required to meet community health needs assessment (CHNA) requirements under Internal Revenue Code (IRC) Section 501(r)(3). This notice effectively extends the deadlines that were already extended by Notice 2020-23, issued on April 9, 2020. In that notice, affected taxpayers were given until July 15, 2020, to perform CHNA requirements originally due on or after April 1, 2020, and before July 15, 2020. The newest notice extends the postponement until December 31, 2020. Any hospitals with a CHNA or implementation strategy due between April 1, 2020, and December 31, 2020, will now have a due date of December 31 to meet these requirements.

The CHNA requirements in §501(r)(3) state that the CHNA must be conducted by the end of the third taxable year, and the implementation strategy is required to be adopted on or before the 15th day of the fifth month after the taxable year in which the facility completes the CHNA. Section 4959 imposes a $50,000 excise tax on a hospital that fails to meet either of these CHNA requirements.

Although the due date is postponed, the hospital isn’t considered to have completed the final step for the CHNA in a later taxable year for purposes of applying §1.501(r)-3(c)(5) of the regulations. Therefore, the deadline for completion is extended for this year without penalty, but that doesn’t change the tax year that it’s considered completed for purposes of reporting on the Form 990, Schedule H, or as it relates to the start of the next third taxable year cycle. For example, a September 30, 2020, year-end that has a CHNA normally due September 30, 2020, is now extended until December 31, 2020. The Form 990, Schedule H will show that the CHNA was completed for tax year 2019 (based on the start of the fiscal year October 1, 2019). Assuming no short tax years, the next CHNA will be due September 30, 2023.

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