Tax 990

Form 990 Filing Requirements for Hospitals

Get a complete understanding of obtaining tax-exempt status and ensuring 990 compliance!

Understanding Tax Compliance for 501(c)(3) Hospitals

- Updated March 26, 2024 - 2.00 PM - Admin, Tax990

Any nonprofits that are organized and operated exclusively for exempt purposes are granted tax-exempt status by the IRS. Though these organizations are not required to pay taxes, there are certain annual filing requirements that they must fulfill to ensure tax compliance.

In this article, you can find more details on how Hospitals can obtain 501(c)(3) tax-exempt status and remain compliant with the IRS.

How Does the IRS Define Hospitals?

There are two definitions for Hospitals under two different IRC sections,

Under IRC Section 170(b)(1)(A)(iii)

  • This section defines the hospitals with regard to examples of organizations that are hospitals and organizations that are not. Here is an example:
  • A rehabilitation institution with the principal purpose of providing medical or hospital care - Qualified as a hospital.
  • An organization whose primary purpose is providing health care services to patients in their own homes under their private physicians’ directions - Not qualified as a hospital.

Under IRC Section 501(r)

  • The IRC section 501(r) defines a hospital organization as an organization that operates a facility that is required by state laws to be licensed, registered, or similarly recognized as a hospital and any other organization that has the provision of hospital care as its principal function or purpose as determined by the secretary.

How Hospitals Can Obtain Tax-Exempt Status?

Hospitals that operate exclusively towards the promotion of health by providing healthcare services is considered charitable. These hospitals are eligible to apply for tax exemption under the IRC section 501(C)(3) if they meet the requirements specified below.

  • Must be organized and operated exclusively for the furtherance of exempt purposes
  • Hospital’s net earnings shouldn’t benefit any private shareholder
  • Hospital shouldn’t participate in lobbying activities and shouldn’t involve in political activities
  • Hospital must comply with the community benefit standard through its activities. This means that they operate to promote the health of a broader class of persons that benefits the community.

In addition to 501(c)(3) requirements, the hospitals must also fulfill the following requirements specified
under 501(r).

  • Community Health Needs Assessment (CHNA) - Section 501(r)(3):

    Every three years, the hospital must conduct CHNA, make it widely available to the public, and get inputs from persons representing the broad interests of the community served with expertise in public health.

  • Financial Assistance Policy and Emergency Medical Care Policy – Section 501(r)(4):

    Must have established a written emergency medical care policy and a written financial assistance policy (FAP) for all the hospital facilities operated.

  • Limitation on Charges – Section 501(r)(5):

    The charges for emergency or other essential medical care should be limited to eligible individuals (under FAP) to not exceed what is generally billed to insured individuals for such care.

  • Billing and Collections – Section 501(r)(6):

    The hospital should attempt substantially to identify whether the respective individual is eligible for any FAP assistance before involving in any extraordinary collection actions (ECAs).

The hospitals that fulfill these requirements can file Form 1023, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code to apply for exemption. If the hospital’s gross receipts are less than $5,000, they can also file Form 1023-EZ based on their answers on the
eligibility worksheet.

Form 990 Filing Requirements for 501(c)(3) Hospitals

The IRS requires hospitals that have obtained 501(c)(3) tax-exempt status to file Form 990 every year to report information regarding their revenue, expenses, assets, liabilities, program services, activities, etc.

Though there are different form variants available in the Form 990 series (such as 990-EZ, 990-N, and 990-PF), Hospitals should only file Form 990 irrespective of their gross receipts and asset values.

Additional Filing Requirements for Hospitals

  • Hospitals that file Form 990 are required to include Form 990 Schedule H to provide detailed information on FAPs, community-building programs, and certain other aspects specified under section 501(r). In addition, they may need to include a few other Schedules as well.
    Learn more about Schedules
  • Also, Hospitals that file 990 or 990-EZ and have generated an income of $1000 or more through unrelated businesses during the corresponding tax year must file Form 990-T.

When is the Deadline for Hospitals to file Form 990?

501(c)(3) Hospitals are required to file their Form 990 on or before the 15th day of the 5th month after their accounting period ends. Therefore, if the hospital is operating on a calendar tax year, then the deadline to file Form 990 with the IRS is May 15th.

Operating on a fiscal tax year? Use our due date calculator to find your due date

Meet Your Hospital’s 990 Filing Requirements with Tax 990!

Tax 990 helps hospitals e-file their Form 990 efficiently and accurately. As an IRS-authorized e-file provider, Tax 990 offers various helpful features that simplify the 990 filing process.

  • Free Schedules - Automatically includes the required Schedules for free, based on the data you enter
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    form preparation
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  • Reviewers and Approvers - Invite your hospital’s higher officials to review and approve your returns
  • Instant Status Updates - You can opt in to IRS status updates of on your forms via email and
    text notifications
  • Dedicated Customer Support - Our support team resolves your questions instantly via live chat, phone and email.

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