Thomas K. Hyatt is a partner in the law firm Dentons US LLP, resident in the Washington, DC office. His practice is focused on corporate and tax-exempt organization issues for nonprofit organizations. He has particular expertise in legal issues affecting tax-exempt healthcare providers and in governance and public policy issues affecting tax-exempt higher education institutions.Mr. Hyatt has represented organizations including public and private hospitals, multihospital systems, integrated delivery systems, academic medical centers, home health agencies, health maintenance organizations, continuing care retirement communities, provider associations, physician clinics, faculty practice plans, physician-hospital organizations, and shared services organizations in such matters. He also frequently works with nonprofit governing boards and board committees to address such issues as regulatory compliance, fiduciary duty, conflicts of interest, bylaws development and revision, senior management compensation and benefits, chief executive contracts and ransition, fundraising, lobbying and political campaign activity, board development, policy development, adoption of best governance practices, membership matters, corporate restructuring, mergers, and joint ventures. He is admitted to practice in the District of Columbia and Pennsylvania.Bruce R. Hopkins is the principal in the law firm Bruce R. Hopkins Law Firm, LLC, in Kansas City, Missouri. He concentrates on the representation of tax-exempt organizations, including healthcare organizations. His practice ranges over the entirety of law matters involving exempt organizations, with emphasis on the formation of nonprofit organizations, acquisition of recognition of tax-exempt status for them, governance and the law, the private inurement and private benefit doctrines, the intermediate sanctions rules, legislative and political campaign activities issues, public charity and private foundation rules, unrelated business planning, use of exempt and for-profit subsidiaries, joint venture planning, tax shelter involvement, review of annual information returns, Internet communications developments, the law of charitable giving (including planned giving), and fundraising law issues.

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• Preface ixAbout the Authors xiBook Citations xv1 Tax-Exempt Healthcare Organizations: An Overview 11.2 Defining Tax-Exempt Organizations 11.5 Charitable Healthcare Organizations 11.8 Promotion of Health 21.10 ABLE Programs 23 Public Charities and Private Foundations (New) 53.3 Commerciality Doctrine 54 Private Inurement, Private Benefit, and Excess Benefit Transactions 94.4 Private Inurement—Scope and Types 94.6 Essence of Private Benefit 104.9 Excess Benefit Transactions 125 Public Charities and Private Foundations 135.1 Public Institutions 135.6 Recognition of Change in Public Charity Status 137 Lobbying and Political Activities 157.1 Legislative Activities Limitation 157.4 Political Activities Limitation 167.5 Business Expense Deduction Rules and Political Activities 187.7 Public Policy Advocacy Activities 197.8 Political Activities of Social Welfare Organizations 198 Hospitals 218.3 Public Hospitals 219 Managed Care Organizations 239.3 Commercial-Type Insurance Providers 239.5 Recent Developments 2313 Other Provider and Supplier Organizations 2713.3 Qualified Nonprofit Health Insurance Issuers 2713.5 Accountable Care Organizations 2816 For-Profit Subsidiaries 3316.3 Attribution of Subsidiary’s Activities to Exempt Parent 3317 Exempt and Nonexempt Cooperatives 3517.1 Cooperative Hospital Service Organizations 3518 Business Leagues 3718.1 Business Leagues in General 3718.2 Healthcare Trade Associations 3819 Other Health-Related Organizations 3919.4 Hospital Management Services Organizations 3919.5 Regional Health Information Organizations 4020 Healthcare Provider Reorganizations 4120.1 Some Basics about Reorganizations 4121 Mergers and Conversions 4321.4 Conversion from Nonexempt to Exempt Status 4322 Partnerships and Joint Ventures (New) 4522.9 Whole-Hospital Joint Ventures 4524 Tax Treatment of Unrelated Business Activities 4724.2 Definition of Trade or Business 4724.3 Definition of Regularly Carried On 4924.5 Application of Substantially Related Test to Healthcare Organizations 5024.11 Pharmacy, Medical Supplies, and Service Sales 5124.12 Laboratory Testing Services 5124.13 Medical Research 5224.18 Other Exceptions to Unrelated Income Taxation 5324.20 Revenue from Controlled Organizations 5524.21 Unrelated Debt-Financed Income 5524.23 Computation of Unrelated Business Taxable Income 5525 Physician Recruitment and Retention 6125.5 Specific Recruitment and Retention Techniques 6126 Charity Care 6326.6 Definitional and Reporting Issues 6326.9 Charity Care and National Health Reform 6426.10 Additional Statutory Requirements for Hospitals 6426.12 Provider Taxes (New) 8227 Worker Classification and Employment Taxes 8527.7 Medical Residents and the Student Exception 8528 Compensation and Employee Benefits 8728.3 Executive Compensation 8728.5 Overview of Employee Benefits Law 8728.6 Deferred Compensation in General 8828.7 Excessive Executive Compensation (New) 9130 Tax-Exempt Bond Financing 9530.3 Disqualification of Tax-Exempt Bonds 9531 Fundraising Regulation 10531.2 Federal Law Regulation 10533 Governance 10733.4A IRS Ruling Policy 10734 Exemption and Public Charity Recognition Processes 11134.1 Exemption Recognition Process 11134.5 Public Charity Status 12134.6 Group Exemption 12134.7A Notice Requirements for Social Welfare Organizations (New) 12234.8 Procedure Where Determination Is Adverse 12334.9 Constitutional Law Aspects of Process 12535 Maintenance of Tax-Exempt Status and Avoidance of Penalties 12735.1 Material Changes 12735.2A Modification of Tax Exemption (New) 12935.4 Redesigned Annual Information Return 12935.5 Disclosure Requirements 13035.6 IRS Disclosure to State Officials 13136 IRS Audits of Healthcare Organizations 13336.2 Audit Procedures 133Cumulative Table of Cases 139Cumulative Table of IRS Revenue Rulings 149Cumulative Table of IRS Revenue Procedures 153Cumulative Table of IRS Private Letter Rulings 155Cumulative Table of IRS Technical Advice Memoranda 161Table of Chief Counsel Advice Memoranda 163Cumulative Table of IRS General Counsel Memoranda 165Table of Tax Reform Legislation 167Cumulative Index 173

Thomas K. Hyatt is a partner in the law firm Dentons US LLP, resident in the Washington, DC office. His practice is focused on corporate and tax-exempt organization issues for nonprofit organizations. He has particular expertise in legal issues affecting tax-exempt healthcare providers and in governance and public policy issues affecting tax-exempt higher education institutions.Mr. Hyatt has represented organizations including public and private hospitals, multihospital systems, integrated delivery systems, academic medical centers, home health agencies, health maintenance organizations, continuing care retirement communities, provider associations, physician clinics, faculty practice plans, physician-hospital organizations, and shared services organizations in such matters. He also frequently works with nonprofit governing boards and board committees to address such issues as regulatory compliance, fiduciary duty, conflicts of interest, bylaws development and revision, senior management compensation and benefits, chief executive contracts and ransition, fundraising, lobbying and political campaign activity, board development, policy development, adoption of best governance practices, membership matters, corporate restructuring, mergers, and joint ventures. He is admitted to practice in the District of Columbia and Pennsylvania.Bruce R. Hopkins is the principal in the law firm Bruce R. Hopkins Law Firm, LLC, in Kansas City, Missouri. He concentrates on the representation of tax-exempt organizations, including healthcare organizations. His practice ranges over the entirety of law matters involving exempt organizations, with emphasis on the formation of nonprofit organizations, acquisition of recognition of tax-exempt status for them, governance and the law, the private inurement and private benefit doctrines, the intermediate sanctions rules, legislative and political campaign activities issues, public charity and private foundation rules, unrelated business planning, use of exempt and for-profit subsidiaries, joint venture planning, tax shelter involvement, review of annual information returns, Internet communications developments, the law of charitable giving (including planned giving), and fundraising law issues.

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• Preface ixAbout the Authors xiBook Citations xv1 Tax-Exempt Healthcare Organizations: An Overview 11.2 Defining Tax-Exempt Organizations 11.5 Charitable Healthcare Organizations 11.8 Promotion of Health 21.10 ABLE Programs 23 Public Charities and Private Foundations (New) 53.3 Commerciality Doctrine 54 Private Inurement, Private Benefit, and Excess Benefit Transactions 94.4 Private Inurement—Scope and Types 94.6 Essence of Private Benefit 104.9 Excess Benefit Transactions 125 Public Charities and Private Foundations 135.1 Public Institutions 135.6 Recognition of Change in Public Charity Status 137 Lobbying and Political Activities 157.1 Legislative Activities Limitation 157.4 Political Activities Limitation 167.5 Business Expense Deduction Rules and Political Activities 187.7 Public Policy Advocacy Activities 197.8 Political Activities of Social Welfare Organizations 198 Hospitals 218.3 Public Hospitals 219 Managed Care Organizations 239.3 Commercial-Type Insurance Providers 239.5 Recent Developments 2313 Other Provider and Supplier Organizations 2713.3 Qualified Nonprofit Health Insurance Issuers 2713.5 Accountable Care Organizations 2816 For-Profit Subsidiaries 3316.3 Attribution of Subsidiary’s Activities to Exempt Parent 3317 Exempt and Nonexempt Cooperatives 3517.1 Cooperative Hospital Service Organizations 3518 Business Leagues 3718.1 Business Leagues in General 3718.2 Healthcare Trade Associations 3819 Other Health-Related Organizations 3919.4 Hospital Management Services Organizations 3919.5 Regional Health Information Organizations 4020 Healthcare Provider Reorganizations 4120.1 Some Basics about Reorganizations 4121 Mergers and Conversions 4321.4 Conversion from Nonexempt to Exempt Status 4322 Partnerships and Joint Ventures (New) 4522.9 Whole-Hospital Joint Ventures 4524 Tax Treatment of Unrelated Business Activities 4724.2 Definition of Trade or Business 4724.3 Definition of Regularly Carried On 4924.5 Application of Substantially Related Test to Healthcare Organizations 5024.11 Pharmacy, Medical Supplies, and Service Sales 5124.12 Laboratory Testing Services 5124.13 Medical Research 5224.18 Other Exceptions to Unrelated Income Taxation 5324.20 Revenue from Controlled Organizations 5524.21 Unrelated Debt-Financed Income 5524.23 Computation of Unrelated Business Taxable Income 5525 Physician Recruitment and Retention 6125.5 Specific Recruitment and Retention Techniques 6126 Charity Care 6326.6 Definitional and Reporting Issues 6326.9 Charity Care and National Health Reform 6426.10 Additional Statutory Requirements for Hospitals 6426.12 Provider Taxes (New) 8227 Worker Classification and Employment Taxes 8527.7 Medical Residents and the Student Exception 8528 Compensation and Employee Benefits 8728.3 Executive Compensation 8728.5 Overview of Employee Benefits Law 8728.6 Deferred Compensation in General 8828.7 Excessive Executive Compensation (New) 9130 Tax-Exempt Bond Financing 9530.3 Disqualification of Tax-Exempt Bonds 9531 Fundraising Regulation 10531.2 Federal Law Regulation 10533 Governance 10733.4A IRS Ruling Policy 10734 Exemption and Public Charity Recognition Processes 11134.1 Exemption Recognition Process 11134.5 Public Charity Status 12134.6 Group Exemption 12134.7A Notice Requirements for Social Welfare Organizations (New) 12234.8 Procedure Where Determination Is Adverse 12334.9 Constitutional Law Aspects of Process 12535 Maintenance of Tax-Exempt Status and Avoidance of Penalties 12735.1 Material Changes 12735.2A Modification of Tax Exemption (New) 12935.4 Redesigned Annual Information Return 12935.5 Disclosure Requirements 13035.6 IRS Disclosure to State Officials 13136 IRS Audits of Healthcare Organizations 13336.2 Audit Procedures 133Cumulative Table of Cases 139Cumulative Table of IRS Revenue Rulings 149Cumulative Table of IRS Revenue Procedures 153Cumulative Table of IRS Private Letter Rulings 155Cumulative Table of IRS Technical Advice Memoranda 161Table of Chief Counsel Advice Memoranda 163Cumulative Table of IRS General Counsel Memoranda 165Table of Tax Reform Legislation 167Cumulative Index 173

Thomas K. Hyatt is a partner in the law firm Dentons US LLP, resident in the Washington, DC office. His practice is focused on corporate and tax-exempt organization issues for nonprofit organizations. He has particular expertise in legal issues affecting tax-exempt healthcare providers and in governance and public policy issues affecting tax-exempt higher education institutions.Mr. Hyatt has represented organizations including public and private hospitals, multihospital systems, integrated delivery systems, academic medical centers, home health agencies, health maintenance organizations, continuing care retirement communities, provider associations, physician clinics, faculty practice plans, physician-hospital organizations, and shared services organizations in such matters. He also frequently works with nonprofit governing boards and board committees to address such issues as regulatory compliance, fiduciary duty, conflicts of interest, bylaws development and revision, senior management compensation and benefits, chief executive contracts and ransition, fundraising, lobbying and political campaign activity, board development, policy development, adoption of best governance practices, membership matters, corporate restructuring, mergers, and joint ventures. He is admitted to practice in the District of Columbia and Pennsylvania.Bruce R. Hopkins is the principal in the law firm Bruce R. Hopkins Law Firm, LLC, in Kansas City, Missouri. He concentrates on the representation of tax-exempt organizations, including healthcare organizations. His practice ranges over the entirety of law matters involving exempt organizations, with emphasis on the formation of nonprofit organizations, acquisition of recognition of tax-exempt status for them, governance and the law, the private inurement and private benefit doctrines, the intermediate sanctions rules, legislative and political campaign activities issues, public charity and private foundation rules, unrelated business planning, use of exempt and for-profit subsidiaries, joint venture planning, tax shelter involvement, review of annual information returns, Internet communications developments, the law of charitable giving (including planned giving), and fundraising law issues.

Select Guide Rating

• Preface ixAbout the Authors xiBook Citations xv1 Tax-Exempt Healthcare Organizations: An Overview 11.2 Defining Tax-Exempt Organizations 11.5 Charitable Healthcare Organizations 11.8 Promotion of Health 21.10 ABLE Programs 23 Public Charities and Private Foundations (New) 53.3 Commerciality Doctrine 54 Private Inurement, Private Benefit, and Excess Benefit Transactions 94.4 Private Inurement—Scope and Types 94.6 Essence of Private Benefit 104.9 Excess Benefit Transactions 125 Public Charities and Private Foundations 135.1 Public Institutions 135.6 Recognition of Change in Public Charity Status 137 Lobbying and Political Activities 157.1 Legislative Activities Limitation 157.4 Political Activities Limitation 167.5 Business Expense Deduction Rules and Political Activities 187.7 Public Policy Advocacy Activities 197.8 Political Activities of Social Welfare Organizations 198 Hospitals 218.3 Public Hospitals 219 Managed Care Organizations 239.3 Commercial-Type Insurance Providers 239.5 Recent Developments 2313 Other Provider and Supplier Organizations 2713.3 Qualified Nonprofit Health Insurance Issuers 2713.5 Accountable Care Organizations 2816 For-Profit Subsidiaries 3316.3 Attribution of Subsidiary’s Activities to Exempt Parent 3317 Exempt and Nonexempt Cooperatives 3517.1 Cooperative Hospital Service Organizations 3518 Business Leagues 3718.1 Business Leagues in General 3718.2 Healthcare Trade Associations 3819 Other Health-Related Organizations 3919.4 Hospital Management Services Organizations 3919.5 Regional Health Information Organizations 4020 Healthcare Provider Reorganizations 4120.1 Some Basics about Reorganizations 4121 Mergers and Conversions 4321.4 Conversion from Nonexempt to Exempt Status 4322 Partnerships and Joint Ventures (New) 4522.9 Whole-Hospital Joint Ventures 4524 Tax Treatment of Unrelated Business Activities 4724.2 Definition of Trade or Business 4724.3 Definition of Regularly Carried On 4924.5 Application of Substantially Related Test to Healthcare Organizations 5024.11 Pharmacy, Medical Supplies, and Service Sales 5124.12 Laboratory Testing Services 5124.13 Medical Research 5224.18 Other Exceptions to Unrelated Income Taxation 5324.20 Revenue from Controlled Organizations 5524.21 Unrelated Debt-Financed Income 5524.23 Computation of Unrelated Business Taxable Income 5525 Physician Recruitment and Retention 6125.5 Specific Recruitment and Retention Techniques 6126 Charity Care 6326.6 Definitional and Reporting Issues 6326.9 Charity Care and National Health Reform 6426.10 Additional Statutory Requirements for Hospitals 6426.12 Provider Taxes (New) 8227 Worker Classification and Employment Taxes 8527.7 Medical Residents and the Student Exception 8528 Compensation and Employee Benefits 8728.3 Executive Compensation 8728.5 Overview of Employee Benefits Law 8728.6 Deferred Compensation in General 8828.7 Excessive Executive Compensation (New) 9130 Tax-Exempt Bond Financing 9530.3 Disqualification of Tax-Exempt Bonds 9531 Fundraising Regulation 10531.2 Federal Law Regulation 10533 Governance 10733.4A IRS Ruling Policy 10734 Exemption and Public Charity Recognition Processes 11134.1 Exemption Recognition Process 11134.5 Public Charity Status 12134.6 Group Exemption 12134.7A Notice Requirements for Social Welfare Organizations (New) 12234.8 Procedure Where Determination Is Adverse 12334.9 Constitutional Law Aspects of Process 12535 Maintenance of Tax-Exempt Status and Avoidance of Penalties 12735.1 Material Changes 12735.2A Modification of Tax Exemption (New) 12935.4 Redesigned Annual Information Return 12935.5 Disclosure Requirements 13035.6 IRS Disclosure to State Officials 13136 IRS Audits of Healthcare Organizations 13336.2 Audit Procedures 133Cumulative Table of Cases 139Cumulative Table of IRS Revenue Rulings 149Cumulative Table of IRS Revenue Procedures 153Cumulative Table of IRS Private Letter Rulings 155Cumulative Table of IRS Technical Advice Memoranda 161Table of Chief Counsel Advice Memoranda 163Cumulative Table of IRS General Counsel Memoranda 165Table of Tax Reform Legislation 167Cumulative Index 173