Hospital exemption revoked for section 501(r) failures

Plain-English summary

The IRS revoked a hospital authority's section 501(c)(3) exemption after examining its compliance with the Affordable Care Act's community-health requirements. The hospital used a shared community health needs assessment, but the report did not clearly identify the hospital as an organization to which it applied. The hospital also did not adopt the required implementation strategy addressing the needs identified in the assessment. The IRS treated these as significant failures under section 501(r), not minor omissions, and revoked exemption effective on the redacted date. The organization had told the IRS at the start of the examination that it wanted to give up its exempt status.

Ruling snapshot

• Question: Did the hospital authority satisfy the community health needs assessment and implementation-strategy requirements needed to retain section 501(c)(3) status?
• Outcome: Revoked
• Key authorities: IRC §§ 501(c)(3) and 501(r)(3); Treas. Reg. §§ 1.501(r)-2 and 1.501(r)-3

Full text (IRS public release)

~ Internal Revenue Service
Department of the Treasury Date:
f~
IRS Tax Exempt and Government Entities February 25, 2025

            Release Number: 202521025
            Release Date: 5/23/2025
            Uil Code: 501.03-00
                                                                            -
                                                                            Taxpayer ID number (last 4 digits):


                                                                            Form:

                                                                             ■
                                                                            Tax periods ended:


                                                                             N
                                                                             ID
                                                                             Te
                                                                             Fa
                                                                            Last day to file petition with United States
                                                                            Tax Court:
                                                                              May 26, 2025

CERTIFIED MAIL - Return Receipt Requested
Dear
Why we are sending you this letter
This is a final dete1mination that you don't qualify for exemption from federal income tax under Internal
Revenue Code (IRC) Section 50l(a) as an organization described in IRC Section 501(c)(3), effective
. Your detennination letter dated , is revoked.
Our adverse detennination as to your exempt status was made for the following reasons: Your Organization did
not meet all the requirements of the Internal Revenue Code under Section 50l(r). You did not to adopt an
Implementation Strategy as required by the Internal Revenue Code Section 501(r)(3)(A)(ii). Additionally, your
Organization did not clearly identify the repo11ing requirements of the CHNA, as required under Treasury
Regulation Section 1.50l(r)-3(b)(6)(v)(A).
Organizations that are not exempt under IRC Section 501 generally are required to file federal income tax returns
and pay tax, where applicable. For farther instmctions, forms and inf01mation please visit ms.gov.
Contributions to your organization are no longer deductible under IRC Section 170.
What you must do if you disagree with this determination
If you want to contest our final determination, you have 90 days i:om the date this detennination letter was
mailed to you to file a petition or complaint in one of the three federal courts listed below.
How to file your action for declaratory judgment
If you decide to contest this detennination, you can file an action for declarato1y judgment under the provisions
of Section 7428 of the Code in either:
• The United States Tax Com1,
• The United States Com1 of Federal Claims, or
• The United States District Com1 for the District of Columbia
You must file a petition or complaint in one of these three courts within 90 days from the date we mailed this
determination letter to you. You can download a fillable petition or complaint f01m and get information about
filing at each respective com1's website listed below or by contacting the Office of the Clerk of the Com1 at one
of the addresses below. Be sure to include a copy of this letter and any attachments and the applicable filing fee
with the petition or complaint.

                                                                                           Letter 6337 (Rev. 3-2024)
                                                                                           Catalog Number 74808E

You can eFile your completed U.S. Tax Court petition by following the instructions and user guides available
on the Tax Court website at ustaxcourt.gov/dawson.html. You will need to register for a DAWSON account to
do so. You may also file your petition at the address below:
United States Tax Court
400 Second Street, NW
Washington, DC 2021 7
ustaxcourt.gov
The websites of the U.S. Court of Federal Claims and the U.S. District Court for the District of Columbia contain
instructions about how to file your completed complaint electronically. You may also file your complaint at one of
the addresses below:
US Court of Federal Claims
717 Madison Place, NW
Washington, DC 20439
uscfc.uscourts.gov
US District Court for the District of Columbia
333 Constitution Avenue, NW
Washington, DC 20001
dcd.uscourts.gov
Processing of income tax returns and assessments of any taxes due will not be delayed if you file a petition for
declaratory judgment under IRC Section 7428.
The IRS office whose phone number appears at the top of the notice can best address and access your tax
information and help get you answers. However, you may be eligible for free help from the Taxpayer Advocate
Service (TAS) if you can't resolve your tax problem with the IRS or if you believe an IRS procedure just isn't
working as it should. TAS is an independent organization within the IRS that helps taxpayers and protects
taxpayer rights. Visit TaxpayerAdvocate.IRS.gov/contact-us or call 877-777-4778 (TTY/TDD 800-829-4059)
to find the location and phone number of your local advocate. Learn more about TAS and your rights under the
Taxpayer Bill of Rights at TaxpayerAdvocate.IRS.gov. Do not send your Tax Court petition to TAS. Use the
Tax Court address provided earlier in the letter. Contacting TAS does not extend the time to file a petition.
Where you can find more information
Enclosed are Publication 1, Your Rights as a Taxpayer, and Publication 594, The IRS Collection Process, for
more comprehensive information.
Find tax forms or publications by visiting IRS.gov/forms or calling 800-TAX-FORM (800-829-3676). If you
have questions, you can call the person shown at the top of this letter.
If you prefer to write, use the address shown at the top of this letter. Include your telephone number, the best
time to call, and a copy of this letter.
You may fax your documents to the fax number shown above, using either a fax machine or online fax service.
Protect yourself when sending digital data by understanding the fax service's privacy and security policies.

                                                                                       Letter 6337 (Rev. 3-2024)
                                                                                       Catalog Number 74808E

Keep the original letter for your records.
Sincerely,
Digitally signed by Lynn A.
• kl Brinkley
Lynn A• Brm ey Date:2025.02.2313:16:31
-05'00'

                                         Lynn A. Brinkley
                                         Director, Exempt Organizations Examinations

Enclosures:
Publication 1
Publication 594
Publication 892

                                                                                         Letter 6337 (Rev. 3-2024)
                                                                                         Catalog Number 74808E

                                                          Date:

~
Department of the Treasury January 17, 2023
Internal Revenue Service Taxpayer ID number:
Tax Exempt and Government Entities
IRS Form:

                                                          Tax periods ended:

                                                          PGrson to contact:
                                                             Name:
                                                             ID number:
                                                             Telephone:
                                                             Fax:
                                                             Address:


                                                          Manager's contact information:
                                                             Name:
                                                             ID number:
                                                             Telephone:
                                                          Response due date:
                                                             February 17, 2023

CERTIFIED MAIL-Return Receipt Requested

Dear

Why you're receiving this letter
We enclosed a copy of our audit report, Form 886-A, Explanation of Items, explaining that we propose
to revoke your tax-exempt status as an organization described in Internal Revenue Code (IRC) Section
50l(c)(3).

If you agree
If you haven't already, please sign the enclosed Form 6018, Consent to Proposed Action, and return it
to the contact person shown at the top of this letter. We'll issue a final adverse letter determining that
you aren't an organization described in IRC Section 50l(c)(3) for the periods above.

After we issue the final adverse determination letter, we'll announce that your organization is no
longer eligible to receive tax deductible contributions under IRC Section 170.

                                                                        Letter 3618 (Rev. 8-2019)
                                                                        Catalog Number 34809F

If you disagree
1. Request a meeting or telephone conference with the manager shown at the top of this letter.

2. Send any information you want us to consider.

3. File a protest with the IRS Appeals Office. If you request a meeting with the manager or send
   additional information as stated in 1 and 2, above, you'll still be able to file a protest with IRS
   Appeals Office after the meeting or after we consider the information.

   The IRS Appeals Office is independent of the Exempt Organizations division and resolves
   most disputes informally. If you file a protest, the auditing agent may ask you to sign a consent
   to extend the period of limitations for assessing tax. This is to allow the IRS Appeals Office
   enough time to consider your case. For your protest to be valid, it must contain certain specific
   information, including a statement of the facts, applicable law, and arguments in support of
   your position. For specific information needed for a valid protest, refer to Publication 892,
   How to Appeal an IRS Determination on Tax-Exempt Status.

   Fast Track Mediation (FTM) referred to in Publication 3498, The Examination Process,
   generally doesn't apply now that we've issued this letter.

4. Request technical advice from the Office of Associate Chief Counsel (Tax Exempt
   Government Entities) if you feel the issue hasn't been addressed in published precedent or has
   been treated inconsistently by the IRS.

   If you're considering requesting technical advice, contact the person shown at the top of this
   letter. If you disagree with the technical advice decision, you will be able to appeal to the IRS
   Appeals Office, as explained above. A decision made in a technical advice memorandum,
   however. generally is final and binding on Appeals.

If we don't hear from you
If you don't respond to this proposal within 30 calendar days from the date of this letter, we'll issue a
final adverse determination letter.

Contacting the Taxpayer Advocate Office is a taxpayer right
The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that can help
protect your taxpayer rights. TAS can offer you help if your tax problem is causing a hardship, or
you've tried but haven't been able to resolve your problem with the IRS. If you qualify for TAS
assistance, which is always free, TAS will do everything possible to help you. Visit
\,Wiw.taxpa,eradvocate.irs.gov or call 877-777-4778.

                                              2                        Letter 3618 (Rev. 8-2019)
                                                                      Catalog Number 34809F

For additional infornrntion
Yon can get any of the fom1s and publications mentioned in this letter by visiting our ,wbsite at
'YY.-, .. :,, s:•T. :•Li::.." 1:ut: or by calling 800-TA.~-FOR..vl
. (800-829-3676).

If you have questions. you can contact the person shown at the top of this letter.

                                                    Sincerely.
                                                                                 Oigitally.,gnedaySean<>.Henderson
                                                      Sean P• Henderson Date:2074.0U609:19•41 05'00'
                                                     For:
                                                    Lynn A Brinkley
                                                    Director. Exempt Organizations Examinations

Enclosures:
Fonn 886-A
Fotm 6018

                                             3                        Letter 3618 (Rev. 8-2019)
                                                                      Catalog Number 34809F

                                 Department of the Treasury - Internal Revenue Service                Schedule number
  Form 886-A                                                                                          or exhibit
   (May 2017)                        Explanations of Items

Name of taxpayer Tax Identification Number {last 4 digits) Year/Period ended

ISSUE:

Does Authority meet the requirements of Internal Revenue
Code (IRC) Section 50l(r)(3) and retain its status as a 50l(c)(3) organization?

FACTS:

                                               Authority (the                ), established a                    dated
             , creating the                                                         Authority.

The filed Form 1023 signed , requesting exempt status as a 50l(c)(3) organization
as a described in IRC Sections 509(a)(l) and l 70(b)(l )(A)(iii). The application stated the
operated a . The stated on its application that
attention is never refused or reduced based upon the patient's ability to pay.

The application stated that the and , controls all aspects of the authority's existence.

The Internal Revenue Service granted the exempt status, from federal income tax under Section
50l(c)(3) of the Internal Revenue Code, effective . The was identified as a 509(a)
(1) & l 70(b) (1) (A) (iii) . The local county established a to operate under control of
the county meeting community benefit standards of Rev Rul. 69-545.

The is a" "entity receiving status as a tax-exempt IRC 50l(c)(3) organization. It also
qualifies as a governmental unit or as an affiliate of a governmental unit as described in Revenue Procedure
95-48, 1995-2C.B. 418.

The was not required to file Form 990 because

The was selected for examination for possible deficiencies relative to IRC Section 50l(r) which
imposes additional requirements on s identified as tax-exempt under IRC Section 501(c)(3) per
provisions of the Affordable Care Act (ACA). The does not have a Form 990 filing requirement by
virtue of its status as a governmental entity; however, that does not preclude its adherence to statutes enacted
in response to the ACA for IRC Section 501(c)(3) s. The tax year examined ended

The was issued a written request by mail to provide copies of its Community Health Needs
Care Assessment (CHNA) and written implementation strategy to meet the community health needs
identified in the CHNA in accordance with IRC Section 501(r)(3).

Catalog Number 20810W Page 1 www.irs.gov Form 886-A (Rev. 5-2017)

                                    Department of the Treasury - Internal Revenue Service                Schedule number
   Form 886-A                                                                                            or exhibit
    (May 2017)                          Explanations of Items

Name of taxpayer Tax Identification Number (last 4 digits) Year/Period ended

The provided the following records:
1. A copy of the 's policy regarding charity care for indigent patients and billing policies.
2. A copy of the 's 'community needs assessment'.
3. A copy of the 's collections policy.
4. A copy the 's emergency department admission protocol
5. A letter requesting its 50l(c)(3) status be rescinded.
6. A copy of the 's
7. A copy of the 's

The 's website, contains links to its Community Health Needs
Assessment (CHNA), Financial Assistance Policy (FAP), Emergency Room Admissions Protocol,
Collections Policy, and Price List.

The CHNA was completed by The
refers to the document as a Community Needs Assessment Certification. The listed
purpose of the document is to identify and prioritize the needs and resources of a defined community or
communities. Data is gathered from target populations and results are analyzed in order to understand the
causes and conditions of poverty and changing population demographics. The document lists the uses of the
report to provide justification, both to funders and the public, on the need for resources and how resources
are being allocated to programs. The report also provides useful data to educate the public and community
leaders about issues related to poverty.

                                           (         ) was incorporated as a Nonprofit Organization on
         , when                                                in                      , and
              in order to better meet the needs of the residents of                    . The Board of

Directors drafted Articles oflncorporation and By-laws for the newly founded
which includes a geographical area covering more than square miles.

On became
to embody the organization's of

The CHNA listed the following as its prioritized needs:

The Prioritized Needs in ranked order are:

 3.

The CHNA used is a shared CHNA for multiple organizations. The document does not list the by
name. The document does not contain an implementation strategy.

Catalog Number 20810W Page 2 www.irs.gov Form 886-A (Rev. 5-2017)

                                 Department of the Treasury - Internal Revenue Service                Schedule number
  Form 886-A                                                                                          or exhibit
   (May 2017)                        Explanations of Items

Name of taxpayer Tax Identification Number (last 4 digits) Year/Period ended

LAW:

Section(§) 50l(c)(3) of the Code describes corporations organized and operated exclusively for charitable
purposes no part of the net earnings of which inures to the benefit of any private shareholder or individual.

Treas. Reg.§ 1.50l(c)(3)-l(a)(l) provides that in order to be exempt as an organization described in IRC §
50l(c)(3), an organization must be organized exclusively for one or more exempt purposes.

Treas. Reg. 1.501(c)(3)-l(d)(l)(ii) provides that an exempt organization must serve a public rather than a
private interest. The organization must establish that it is not organized or operated to benefit private
interests such as "designated individuals, the creator or his family, shareholders of the organization, or
persons controlled, directly or indirectly, by such private interests."

IRC § 50l(r)(3)(A) In general. An organization meets the requirements of this paragraph with respect to
any taxable year only if the organization:

1) IRC § 50l(r)(3)(A)(i) has conducted a community health needs assessment which meets the
     requirements of subparagraph (B) in such taxable year or in either of the 2 taxable years immediately
     preceding such taxable year, and

2) IRC § 50l(r)(3)(A)(ii) has adopted an implementation strategy to meet the community health needs
   identified through such assessment.

IRC § 50l(r)(3)(B) Community Health Needs Assessment. A community health needs assessment meets
the requirements of this paragraph if such community health needs assessment:

1) IRC § 501(r)(3)(B)(i) takes into account input from persons who represent the broad interests of the
   community served by the            facility, including those with special knowledge of or expertise in
   public health, and

2) IRC § 50l(r)(3)(B)(ii) is made widely available to the public. Treasury Regulations§ 1.50l(r)-2
   Failures to satisfy section IRC § 50l(r)-

Failures to satisfy IRC §50l(r). (a) Revocation of section IRC §501(c)(3) status. Except as otherwise
provided in paragraphs (b) and (c) of this section, a organization failing to meet one or more of the
requirements ofIRC § 50l(r) separately with respect to one or more facilities it operates may have
its section IRC § 50l(c)(3) status revoked as of the first day of the taxable year in which the failure occurs.
In determining whether to continue to recognize the status of a organization that fails to meet one
or more of the requirements ofIRC § 501(r) with respect to one or more facilities, the
Commissioner will consider all relevant facts and circumstances including, but not limited to, the following:

(1) Whether the organization has previously failed to meet the requirements of IRC § 50l(r), and, if so,
whether the same type of failure previously occurred.

Catalog Number 2081 OW Page 3 www.irs.gov Form 886-A (Rev. 5-2017)

                                 Department of the Treasury - Internal Revenue Service                Schedule number
  Form886-A                                                                                           or exhibit
   (May 2017)                        Explanations of Items

Name of taxpayer Tax Identification Number (last 4 digits) Year/Period ended

(2) The size, scope, nature, and significance of the organization's failure(s).

(3) In the case of an organization that operates more than one facility, the number, size, and
significance of the facilities that have failed to meet the requirements relative to those that have complied
with these requirements.

(4) The reason for the failure(s).

(5) Whether the organization had, prior to the failure(s), established practices or procedures (formal or
informal) reasonably designed to promote and facilitate overall compliance with the section 501(r)
requirements.

(6) Whether the practices or procedures had been routinely followed and the failure(s) occurred through an
oversight or mistake in applying them.

(7) Whether the organization has implemented safeguards that are reasonably calculated to prevent similar
failures from occurring in the future.

(8) Whether the organization corrected the failure(s) as promptly after discovery as is reasonable given the
nature of the failure(s).

(9) Whether the organization took the measures described in paragraphs (a)(7) and (a)(8) of this section
before the Commissioner discovered the failure(s).

(b) Minor omissions and errors

( 1) In general. A facility's omission of required information from a policy or report described in
§ 1.501(r)-3 or§ 1.S0l(r)-4, or error with respect to the implementation or operational requirements
described in § 1.501 (r)-3 through 1.501 (r)-6, will not be considered a failure to meet a requirement of
Section 501(r) if the following conditions are satisfied:

(i) Such omission or e1Tor was minor and either inadvertent or due to reasonable cause.

(ii) The facility corrects such omission or error as promptly after discovery as is reasonable given
the nature of the omission or error. Such correction must include establishment (or review and, if necessary,
revision) of practices or procedures (formal or informal) that are reasonably designed to promote and
facilitate overall compliance with the requirements of Section 50l(r).

(2) Minor. In the case of multiple omissions or errors, the omissions or errors are considered minor for
purposes of this paragraph (b) only if they are minor in the aggregate.

(3) Inadve11ent. For purposes of this paragraph (b), the fact that the same omission or error has been made
and corrected previously is a factor tending to show that an omission or error is not inadvertent.

Catalog Number 20810W Page 4 www.irs.gov Form 886-A (Rev. 5-2017)

                                  Department of the Treasury - Internal Revenue Service                Schedule number
  Form 886-A                                                                                           or exhibit
   (May 2017)                         Explanations of Items

Name of taxpayer Tax Identification Number (last 4 digits) Year/Period ended

(4) Reasonable cause. For purposes of this paragraph (b ), the fact that a facility has established
practices or procedures (fo1mal or informal) reasonably designed to promote and facilitate overall
compliance with the Section 50l(r) requirements prior to the occurrence of an omission or error is a factor
tending to show that the omission or error is due to reasonable cause.

(c) Excusing certain failures if facility corrects and discloses. A facility's failure to meet
one or more of the requirements described in§ l.S0l(r)-3 through§ l.S0l(r)-6 that is neither willful nor
egregious shall be excused for purposes of this section if the facility c01Tects and makes disclosure
in accordance with rules set forth by revenue procedure, notice, or other guidance published in the Internal
Revenue Bulletin. For purposes of this paragraph (c), a "willful'' failure includes a failure due to gross
negligence, reckless disregard, or willful neglect, and an "egregious" failure includes only a very serious
failure, taking into account the severity of the impact and the number of affected persons. Whether a failure
is willful or egregious will be determined based on all of the facts and circumstances. A facility's
correction and disclosure of a failure in accordance with the relevant guidance is a factor tending to show
that the failure was not willful.

Treas. Reg. § l.50l(r)-2(a) provides that, in determining whether to continue to recognize the§ 501(c)(3)
status of a organization that fails to one or more of the requirements of§ 501(r) with respect to one
or more facilities, the Commissioner will consider all relevant facts and circumstances.

Treas. Reg. § l.501(r)-3(a) In General. With respect to any taxable year, a organization meets the
requirements of section 501(r)(3) with respect to a facility it operates only if Treas. Reg. § 1.50l(r)-
3(a)(l) The facility has conducted a community health needs assessment (CHNA) that meets the
requirements of paragraph (b) of this section in such taxable year or in either of the two taxable years
immediately preceding such taxable year (except as provided in paragraph (d) of this section); and
Treas. Reg.§ l.50l(r)-3(a)(2) An authorized body of the facility (as defined in §l.50l(r)-
l(b)(4)) has adopted an implementation strategy to meet the community health needs identified through the
CHNA, as described in paragraph (c) of this section, on or before the 15th day of the fifth month after the
end of such taxable year.
Treas. Reg.§ 1.50l(r)-3(b) Conducting A CHNA
Treas. Reg. §.50l(r)-3(b)(l) In General. To conduct a CHNA for purposes of paragraph (a) of this section, a
facility must complete all of the following steps:
Treas. Reg.§ l.50l(r)-3(b)(l)(i)Define the community it serves.
Treas. Reg.§ l.50l(r)-3(b)(l)(ii) Assess the health needs of that community.
Treas. Reg. § 1.50l(r)-3(b)(l)(iii) In assessing the health needs of the community, solicit and take into
account input received from persons who represent the broad interests of that community, including those
with special knowledge of or expertise in public.

Catalog Number 20810W Page 5 www.irs.gov Form 886-A (Rev. 5-2017)

                                  Department of the Treasury - Internal Revenue Service                  Schedule number
  Form886-A                                                                                              or exhibit
   (May 2017)                         Explanations of Items

Name of taxpayer Tax Identification Number (last 4 digits) Year/Period ended

Treas. Reg.§ 1.50l(r)-3(b)(l)(iv) Document the CHNA in a written report (CHNA report) that is adopted
for the facility by an authorized body of the facility.

Treas. Reg. § 1.50l(r)-3(b)(l)(v) Make the CHNA report widely available to the public.
Treas. Reg.§ 1.50l(r)-3(b)(2) Date A CHNA Is Conducted.
Treas. Reg.§ l.50l(r)-3(b)(4) Assessing Community Health Needs. To assess the health needs of the
community it serves for purposes of paragraph (b )( 1)(ii) of this section, a facility must identify
significant health needs of the community, prioritize those health needs, and identify resources (such as
organizations, facilities, and programs in the community, including those of the facility) potentially
available to address those health needs. For these purposes, the health needs of a community include
requisites for the improvement or maintenance of health status both in the community at large and in
particular parts of the community (such as particular neighborhoods or populations experiencing health
disparities). These needs may include, for example, the need to address financial and other barriers to
accessing care, to prevent illness, to ensure adequate nutrition, or to address social, behavioral, and
environmental factors that influence health in the community. A facility may determine whether a
health need is significant based on all of the facts and circumstances present in the community it serves. In
addition, a facility may use any criteria to

Treas. Reg.§ l.50l(r)-3(b)(6)(v)(A) A facility that collaborates with other facilities or
other organizations (such as state or local public health departments) in conducting its CHNA will satisfy
paragraph (b )(l)(iv) of this section if an authorized body of the facility adopts for the
facility a joint CHNA report produced for the facility and one or more of the collaborating facilities
and organizations, provided that the following conditions are met:

    (1) The joint CHNA report meets the requirements of paragraph (b )( 6)(i) of this section.

    (2) The joint CHNA report is clearly identified as applying to the                       facility.

    (3) All of the collaborating         facilities and organizations included in the joint CHNA report
        define their community to be the same.

Treas. Reg. §1.50l(r)-3(c)(4) Joint Implementation Strategies. A facility may develop an
implementation strategy in collaboration with other facilities or other organizations, including, but
not limited to, related and unrelated organizations and facilities, for-profit and government
s, governmental departments, and nonprofit organizations. In general, a facility that
collaborates with other facilities or organizations in developing its implementation strategy must still
document its implementation strategy in a separate written plan that is tailored to the particular
facility, taking into account its specific resources. However, a facility that adopts a joint CHNA
report described in paragraph (b)(6)(v) of this section may also adopt a joint implementation strategy that,
with respect to each significant health need identified through the joint CHNA, either describes how one or
more of the collaborating facilities or organizations plan to address the health need or identifies the health

Catalog Number 20810W Page 6 www.irs.gov Form 886-A (Rev. 5-2017)

                                 Department of the Treasury - Internal Revenue Service                Schedule number
  Form 886-A                                                                                          or exhibit
   (May 2017)                        Explanations of Items

Name of taxpayer Tax Identification Number (last 4 digits) Year/Period ended

need as one the collaborating facilities or organizations do not intend to address and explains why they do
not intend to address the health need. For a collaborating facility to meet the requirements of
paragraph (a)(2) of this section, such a joint implementation strategy adopted for the facility must:

Treas. Reg. §1.50l(r)-3(c)(4)(i) Be clearly identified as applying to the facility.

Treas. Reg. §1.50l(r)-3(c)(4)(ii) Clearly identify the facility's particular role and responsibilities in
taking the actions described in the implementation strategy and the resources the facility plans to
commit to such actions; and

Treas. Reg. § 1.501 (r)-3(c )(4)(iii) Include a summary or other tool that helps the reader easily locate those
portions of the joint implementation strategy that relate to the facility.

Treas. Reg. §1.501(r)-3(c)(5) When the Implementation Strategy Must Be Adopted.

Treas. Reg. § l .50l(r)-3(c)(5)(i) In General. For purposes of paragraph (a)(2) of this section, an authorized
body of the facility must adopt the implementation strategy on or before the 15th day of the fifth
month after the end of the taxable year in which the facility completes the final step for the CHNA
described in paragraph (b)(l) of this section, regardless of whether the facility began working on
the CHNA in a prior taxable year.

Rev. Proc. 95-48 provides an exception from filing for governmental units or affiliates of governmental
units that are exempt from federal income tax under Section 50l(c)(3).

Rev. Proc. 95-48 Section 4.02 provides that an organization will be treated as an affiliate of a governmental
unit if it is described in Section 501 (c) and either (a) It has a ruling from the Service that: (1) its exempt
purpose income is excluded under Section 115; (2) it is entitled to receive deductible contributions under
Section l 70(c )( 1) because the contributions are the for the use of a governmental unit, or (3) it is a wholly
owned instrumentality of a state or political subdivision for employment tax purposes; or (b) it meets the
requirements of Section 4.02(b).

TAXPAYER'S POSITION:

At the start of the examination, the organization expressed that they would like to give up their tax-exempt
status.

GOVERNMENT'S POSITION:

The failed to adequately meet all the requirements of Treas. Reg. §l.50l(r)-3. The did not
adopt an Implementation Strategy as required by IRC § 50l(r)(3)(A)(ii).

Catalog Number 2081 OW Page 7 www.irs.gov Form 886-A (Rev. 5-2017)

                                 Department of the Treasury - Internal Revenue Service                Schedule number
  Form 886-A                                                                                          or exhibit
   {May 2017)                          Explanations of Items

Name of taxpayer Tax Identification Number (last 4 digits) Year/Period ended

The CHNA repmt produced for the failed to meet the requirements of Treas. Reg.§ 1.501(r)-
3(b)(6)(v)(A) because the assessment does not clearly identify it applied to the as required. The
failures noted are significant.

It is the government's position that the failed to adequately meet the requirements ofIRC l.50l(r)-3
resulting in its exempt status being revoked.

CONCLUSION:

The failed to meet all the requirements of the Internal Revenue Code under Section 501(r). The
failed to adopt an Implementation Strategy as required by the Internal Revenue Code Section
50l(r)(3)(A)(ii). The failed to clearly identify the reporting requirements of the CHNA, under
Treas. Reg.§ l.50l(r)-3(b)(6)(v)(A).

Because of the failures listed above, Authority's tax-exempt
status under Internal Revenue Code Section 501(c)(3) has been revoked, effective

Catalog Number 2081 OW Page 8 www.irs.gov Form 886-A (Rev. 5-2017)