Question: We heard that the IRS released a draft revised Schedule H and new instructions in December. We thought that the IRS released those in August. What’s the story?

Answer: The IRS issued an “early release” of those documents in August, then revised them and issued the revised documents in December.

In any event, the new Schedule H and instructions adopt changes required by the Patient Protection and Affordable Care Act (“Act”). The Act created a new Section 501(r), which includes additional requirements that hospitals must meet in order to qualify for tax-exempt status under Section 501(c)(3) of the Internal Revenue Code.

The instructions make it clear that for hospital tax years beginning after March 23, 2012, all tax exempt hospitals must perform a community needs assessment that takes into account input from persons who represent the broad interests of the community and must be made widely available to the public. The hospital then must repeat that needs assessment once every three years and adopt an implementation strategy to meet the community needs identified through that assessment.

For more on the revised Schedule H, please join us for our audio conference on February 6, 2012 that discusses these issues and more.