IRS moves CHNA due dates to December 31, 2020
Due to burdens placed on hospitals by the COVID-19 pandemic, the IRS provided additional relief to hospital organizations that must meet Community Health Needs Assessment (CHNA) requirements under section 501(r)(3) of the Internal Revenue Code. Notice 2020-56 provides further postponement, until December 31, 2020, of the due dates for performing any CHNA requirements due to be completed on or after April 1, 2020, and before December 31, 2020.
Tax-exempt hospital organizations filing Forms 990 must indicate on Schedule H if they have conducted a CHNA in the current taxable year or in either of the two immediately preceding taxable years, and if they have adopted an implementation strategy to meet the significant health needs identified through the most recently completed CHNA. Because these requirements affect the hospital’s tax-exempt status and the law imposes a $50,000 penalty for each hospital facility that fails to meet the requirements, the extension can provide significant relief.
A hospital organization must meet section 501(r) requirements separately for each hospital facility it operates. Section 501(r)(3) requires a hospital organization to conduct a CHNA at least once every three years and adopt an implementation strategy to meet the significant community health needs identified through the CHNA. The CHNA must be conducted (adopted and made widely available to the public) by the end of the third taxable year. The implementation strategy must be adopted on or before the fifteenth day of the fifth month after the end of the taxable year in which the CHNA is conducted.
Relief due to COVID-19 pandemic
On April 9, 2020, the IRS issued Notice 2020-23, which postponed until July 15, 2020, the due date for any CHNA due to be conducted and any implementation strategy due to be adopted on or after April 1, 2020, and before July 15, 2020. The more recent Notice 2020-56 extends this timeframe to postpone until December 31, 2020, any CHNA to be conducted and implementation strategy to be adopted on or after April 1, 2020, and before December 31, 2020.
Even though the due date is extended to December 31, 2020, for purposes of determining the due date for adoption of the implementation strategy, the hospital facility is not considered to have completed the final step for the CHNA in a later taxable year. For example, if the CHNA is to be conducted by April 30, 2020, and the implementation strategy to be adopted by September 15, 2020, the hospital facility now has until December 31, 2020, to complete both steps.
Guidance for reporting
Hospitals using the relief that file Form 990 prior to December 31, 2020, should state in the narrative of Part V.C. of Schedule H (Form 990) that they are eligible for and are relying on the relief provided in the notice, and should not be treated as failing to meet the requirements of section 501(r)(3) prior to December 31, 2020.
Note that Notice 2020-56 only extends the IRS due date for performing CHNA requirements and does not automatically extend any CHNA requirements that may be imposed by state agencies.
This is for informational purposes only. It is not intended to be legal advice and does not create or imply an attorney-client relationship.Download PDF