The Nonprofit Hospital: A Call for New National Guidance Requiring Minimum Annual Charity Care to Qualify for Federal Tax Exemption

This article begins with an examination of the origin of the federal tax exemption of the tax-exempt hospital, the current statutory frame-work for federal tax exemption, and the community benefits standard. Next, the article discusses the rationale for the exemption and the regulatory changes in the standards of exemption that paved the way for the current movement away from charity care by the tax-exempt hospital and the need for new national guidance. Thereafter, the article discusses some state initiatives aimed at making the tax-exempt hospital more accountable. Finally, the article recommends that the Internal Revenue Service (the "Service") issue a new revenue ruling requiring the tax-exempt hospital to provide minimum annual levels of qualitative and quantitative charity care as part of the community benefit standard.