moral or political issues from a religious perspective, where speech of “similar character” has “not ordinarily been treated” as being in violation of the Johnson Amendment by Treasury, which, of course, includes the IRS. That language effectively enshrines guidance issued by the IRS as to what constitutes violations of the Johnson Amendment, including the wide‐ranging Rev. Rul. 2007‐41 (see the text accompanied by infra note 210). It appears that, instead of a directive to Treasury and IRS to ease up on enforcement of the Johnson Amendment in the religious setting, as the order was originally advertised to be, it makes the granting of regulatory leeway to churches even tougher. That not ordinarily been treated standard is a high threshold indeed.Thus, a minister of a church can engage in political campaign speech from the pulpit as long as it does not fall within the types of speech found by the IRS to be political in character. Those interstices are going to be rather creative to craft.9 220.1 REG‐134417‐13.
10 220.2 Fiscal Year 2016 Omnibus Appropriations Act, Pub. L. No. 114‐113, Division E § 127.
11 220.3 Fiscal Year 2017 Consolidated Appropriations Act, Pub. L. No. 115‐31, Division E § 126.
12 220.4 Fiscal Year 2018 Consolidated Appropriations Act, Pub. L. No. 115‐141, Division E § 125.
CHAPTER EIGHT Hospitals
§ 8.3 PUBLIC HOSPITALS
p. 238. Delete last paragraph and insert at end of section:
Public hospitals generally do not pay federal income tax because their income is excluded from gross income owing to the exercise of an essential governmental function and accruing to a state or any political subdivision thereof.44.1 For most of these hospitals, this is a sufficient rationale for not paying taxes. However, some hospitals in this category have also applied for and received recognition from the IRS as a charitable organization. In addition, hospitals that otherwise qualify as an affiliate of a governmental unit,44.2 and thereby do not pay federal income tax, have also applied for and received recognition of their charitable status from the IRS.
There are a number of reasons for this. They typically include the ability to offer an annuity plan to employees as a fringe benefit;44.3 a listing by the IRS in Publication 78, which can attract more charitable contributions; discounted postal rates from the US Postal Service; and state and local sales and property tax exemption. Governmental hospitals that have been recognized as charitable organizations by the IRS and that also qualify as an affiliate of a governmental unit are described as “dual status” hospitals.44.4 Municipal hospitals and municipal hospital districts are examples of hospital organizations that may be created by, controlled by, or are closely affiliated with the government and but also have dual status. Even though they are recognized as charitable organizations, dual status hospitals generally do not have a Form 990 filing requirement.44.5 In addition, they are not subject to the intermediate sanctions rules otherwise applicable to charitable organizations.44.6
However, the IRS has determined that the requirements for charitable hospitals under the Affordable Care Act apply to government hospital organizations that are recognized as charitable organizations.44.7 Based upon field examinations reported by the IRS in recent rulings, many of these public hospitals are no longer aware that they are also charitable organizations or that the Affordable Care Act obligations for charitable hospitals apply to them. In these rulings, hospitals falling into this predicament have agreed to have their charitable status revoked, finding the benefits of that determination no longer relevant, and their governmental public charity status sufficient.
A dual status entity may voluntarily terminate its charitable status.44.8 A successful termination would secure the desired result that it is no longer subject to the ACA requirements for charitable hospitals. However, this voluntary termination would not remove compliance obligations (and potential penalties for failure to comply) for tax years prior to the effective date of termination.
NOTES
1 44.1 IRC § 115.
2 44.2 Rev. Proc. 95‐48, 1995‐2 C.B. 418.
3 44.3 IRC § 403(b).
4 44.4 A governmental unit, including a political subdivision, is not treated by the IRS as a dual status entity because it cannot qualify for charitable status.
5 44.5 Rev. Proc. 95‐48, 1995‐2 C.B. 418.
6 44.6 Reg. § 4958‐2(a); 66 Fed. Reg. 2147.
7 44.7 See Notice 2011‐52, I.R.B. 2011‐30 and the Preamble to the IRS § 501(r) regulations at 79 Fed. Reg. 78957.
8 *44.8 Rev. Proc. 2019‐5, 2019‐1 I.R.B. 230 § 3.01(12).
CHAPTER NINE Managed Care Organizations
1 § 9.3 Commercial‐Type Insurance Providers
§ 9.3 COMMERCIAL‐TYPE INSURANCE PROVIDERS
p. 279, note 102. Insert at end of note:
; FY 1997 Exempt Organizations Continuing Professional Education Technical Instruction Program Textbook, “Insurance: The Rule of '86.”
p. 287, third complete paragraph, next to last line. Delete February 2013 and insert November 2017.
