The deadline expired last week for 550 tax-exempt hospitals to return questionnaires to the IRS on their billing practices, amount of charity care, operations, and compensation formulas. But many hospitals have asked for extensions, claiming that the 80-item questionnaire required an “overwhelming” amount of detail, reports The New York Times. Responding to legislators’ criticism that not-for-profit hospitals are acting more like for-profit entities in a highly competitive market, the IRS says it wants to determine whether hospitals are meeting tax-exempt standards and giving away sufficient amounts of charity care, and whether they are denying care to uninsured patients.
Formal audits will likely follow. “Our audit rates are too low,” Mark W. Everson, the commissioner of internal revenue, admitted to the Times. Only 350 of 7,000 not-for-profit hospitals and healthcare organizations have been audited by the IRS in the last decade. Sen. Charles Grassley (R-IA) is also calling for the IRS and the Treasury Department to clamp down on not-for-profit hospitals that argue that the extensive benefits they provide to their communities compensate for a lack of charity care.
