or more PARCs was announced in mid‐2015, in a memorandum from the Director, Exempt Organizations Division (TEGE‐04‐0715‐0018, July 17, 2015), where it was stated that a PARC consists of three General Schedule grade 14 managers, who will receive “appropriate training” and serve as a committee member for two years. A PARC is to review and recommend referrals for audit in an “impartial and unbiased manner.” The “inventory volume of political activities referrals” will determine the number of PARCs established and the time commitment required of the members of a PARC. It is not known whether the PACI is continuing by that name and thus whether use of PARCs is an element of an ongoing PACI.5 186 TIGTA, “Review of the Processing of Referrals Alleging Impermissible Political Activity by Tax‐Exempt Organizations” (2019‐10‐006 (Oct. 4, 2018)).
6 186.1 See § 7.8, text accompanied by infra note 220.1.
7 186.2 Executive Order No. 13798.
8 186.3 This executive order in four instances frames its reach as being (as it must) within the law and, in addition, states that it is designed to “further compliance” with applicable statutory law. The prohibition, from an exemption standpoint, on political campaign activity by charitable organizations, including churches, sometimes referred to as the “Johnson Amendment,” is law. Therefore, from the standpoint of tax‐exempt churches and other religious entities and political campaign speech, it is hard to see what this executive order accomplishes for them. That would be the case if the order stopped there. But it does not.The order provides that the Department of the Treasury shall not take any adverse action against an individual or a religious organization engaging in speech about 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 the 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 the Treasury and the 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.
13 220.5 Consolidated Appropriations Act, 2019, Pub. L. No. 116‐3, Division D § 124.
14 220.6 Consolidated Appropriations Act, 2020, Pub. L. No. 116‐93, Division C § 122.
15 220.7 Consolidated Appropriations Act, 2021, Pub. L. No. 116‐260, Division E § 122.
CHAPTER EIGHT Hospitals
*§ 8.1 Federal Tax Law Definition of Hospital
*§ 8.1 FEDERAL TAX LAW DEFINITION OF HOSPITAL
A federal definition conundrum occurred when Congress added additional statutory requirements for charitable hospitals to the Code.16.1 These new requirements apply to charitable hospitals; however, for purposes of these requirements only, they only apply to organizations that operate a facility that is required by a state to be licensed, registered, or similarly recognized as a hospital. As a result, it is possible to encounter: (1) an acute care hospital subject to these rules that also qualifies as a public charity as a hospital;16.2 (2) a rehabilitation center that is subject to these rules because it is licensed as a hospital under state law that elects to be classified as a service provider‐type public charity rather than as a hospital;16.3 or (3) an outpatient physician clinic that qualifies as a hospital for public charity purposes, but is not subject to these rules because it is not required to be licensed as a hospital under state law. As the IRS has noted, it is important to understand which legal regime applies to these various definitions of a hospital under the circumstances at hand.16.4
§ 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 U.S. 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
