Pending legislation to clarify hospital tax-exempt status

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A respected Senate Republican is planning to roll out new legislation that could apply a stricter community benefit test to those hospitals seeking tax-exempt status. Such a bill would likely call into question the status of other nonprofit healthcare providers, such as nursing homes.

Sen. Charles Grassley (R-IA), chairman of the Senate Finance Committee, will propose a bill in January that is likely to focus on the original definition of community benefit in the Internal Revenue Code, Diana Aviv, president and chief executive officer of the Independent Sector told the Bureau of National Affairs Healthcare Daily. Aviv is basing her information on her conversation with Dean Zerbe, a tax counsel for the Senate Finance Committee who spoke recently.

The committee will explore whether the definition should be a narrow definition that focuses only on providing health care to low-income people or a broader standard of community benefit that includes a wider array of benefits to the community, she said.