Jack Sawyer Quoted in Modern Healthcare on Tax-Exempt Hospital Tax Issue
29 October 2007
Jack Sawyer was quoted in the October 29th issue of Modern Healthcare in an article titled “Not so taxing after all: Not-for-profit hospitals get a brief scare from IRS letter on doc-practice arrangements, but they learn some lessons, too.” Jack noted that, “the IRS has looked differently upon ancillary services such as laboratory work, ruling that income derived from services provided to the hospital’s own patients is exempt but the income from patients of other hospitals is not. But that distinction has never been applied to the delivery of direct patient care. ‘I think it would be prudent for all of the hospitals to examine the way they operate to see if they have exposure and whether there are ways to mitigate the risk.” Jack suggested that “hospitals go ahead and seek 501(c)(3) status from the IRS for their affiliated practices, as Marietta and others have done. Even that doesn’t automatically bless the dollars generated as tax exempt—a tax-exempt enterprise can still contribute unrelated business income—but it emphasizes the commitment of the practices to the hospital’s charitable function.”