Hospital Lawyer Tells City Council Giving Charity Care is Irrelevant to Non-profit, Tax-Free Status
It takes a whole lot of courage to appear before the Pittsburgh City Council, as University of Pittsburgh Medical Center general counsel Robert Cindrich did, and tell them that the Medical Center’s tax-exempt, IRS-approved non-profit status is not contingent on giving any charity care. As Cindrich put it, “We are not obligated by law to give anything.”
This is probably exactly why the U.S. Senate Committee on Finance, while Senator Charles E. Grassley (R-IA) was Chairman, and now while he the ranking member, has been conducting a years-long investigation into hospital’s non-profit tax-exempt status.
It is also why the IRS, beginning next year has encouraged hospitals to voluntarily fill out a new, detailed schedule H disclosure form about their finances, and in 2009, has mandated that all hospitals must file it with their taxes.
The “we-get-to-pay-no-taxes-and-don’t-have-to-do-anything-because-we-are-angelic-hospitals” attitude on display by Cindrich is, essentially, shameless — and begs for a new law.
This attitude does not reflect a new problem with hospitals.
Consider the following:
- “Some tax-exempt healthcare providers may not differ markedly from for-profit providers in their operations, their attention to the benefit of the community or their levels of charity care.” March 2005 letter to the United States Senate Finance Committee by Mr. Mark Everson, Commissioner of the IRS[i]
- “[C]urrent tax policy lacks specific criteria with respect to tax exemptions for charitable entities and detail on how that tax exemption is conferred. If these criteria are articulated in accordance with desired goals, standards could be established that would allow nonprofit hospitals to be held accountable for providing services and benefits to the public commensurate with their favored tax status.” Mr. David W. Walker, Comptroller General of the United States, in testimony before the U.S. House Committee on Ways and Means, May, 2005[ii]
- “For many non-profit hospitals, we found the link between tax-exempt status and the provision of charitable activities for the poor or underserved is weak. Currently, the Internal Revenue Service (IRS) has no requirements relating hospitals’ charitable activities for the poor to their tax exempt status. If the Congress wishes to encourage non-profit hospitals to provide charity care and other community services that benefit the poor, it should consider revising the criteria for tax exemption.” Mr. Mark Nadel, Associate Director, National and Public Health Issues, of the General Accounting Office told Congress 16 years ago in July, 1991[iii]
If I had to guess, I’d guess that the non-profit hospitals are in for some further investigation as to why it is that they do not pay taxes, and will be subject to new laws detailing what levels of charity care they need to provide to keep their tax-exempt status.
[i] “Tax-Exempt Hospitals: Discussion Draft,” Minority (Republican) Staff of the U.S. Senate Committee on Finance, October, 2007, page 1.
[iii] Ibid, citing a Mr. Nadel’s testimony before the U.S. House Committee on Ways and Means, July 10, 1991