How do tax-exempt hospitals claim their status?
Hospitals seeking tax-exempt status in the United States must apply for recognition of their tax-exempt status from the Internal Revenue Service (IRS). The process involves submitting Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code.
Additionally, hospitals must meet the requirements set forth in Section 501(c)(3) of the Internal Revenue Code, which include:
1. Organization and Operation: The hospital must be organized and operated exclusively for charitable, educational, or scientific purposes. This means that the primary purpose of the hospital must be to provide medical care to the community, and any profits generated must be used to further the hospital's charitable mission.
2. Non-Profit Requirement: The hospital must not be organized for profit, and no part of its net earnings may inure to the benefit of any private shareholder or individual. This means that the hospital's revenue must be used solely for its charitable purposes, and no individual may financially benefit from the hospital's operations.
3. Charitable Activities: The hospital must engage in substantial charitable activities that benefit the community. This includes providing medical care to those in need, regardless of their ability to pay, and conducting medical research and education programs.
4. Political Activities Restriction: The hospital must not engage in substantial lobbying or political activities. This means that the hospital cannot use its resources to influence legislation or support political candidates.
Once a hospital has submitted Form 1023 and meets the requirements set forth in Section 501(c)(3), the IRS will grant it tax-exempt status. This status allows the hospital to operate without paying federal income taxes on its income and receive tax-deductible donations from individuals and organizations.
To maintain their tax-exempt status, hospitals must continue to comply with the requirements of Section 501(c)(3) and file an annual Form 990, Return of Organization Exempt From Income Tax, with the IRS.