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Mandatory Charity Care Limits Unlikely; Section 501 Changes Possible in Tax Reform

Monday, February 11, 2013
BALTIMORE--While tax reform discussions in Congress this year may not focus specifically on exempt organizations, it will be impossible to rewrite the tax code without looking at Section 501, which governs them, a Senate Democratic aide told a gathering of tax-exempt groups Feb. 8.

Both parties have expressed interest in comprehensive tax reform in 2013.

Because Congress is looking at changing revenue streams for Section 501 limitations on deductions, there will be a need for a wider conversation about that section, the aide said at a joint meeting of the Great Lakes, Gulf Coast, and Pacific Coast Area Tax Exempt and Government Entities Councils, and the Mid-Atlantic and Northeast Pension Liaison Groups.

The imposition of mandatory amounts of charity care for tax-exempt hospitals, which some institutions had feared under proposals by Sen. Charles Grassley (R-Iowa) while he was Finance Committee chairman, are not garnering much attention now, as sequestration and the possibility of government shutdowns take center stage, the aide said. However, a fair amount of re-examination of how the Affordable Care Act is working can be expected once Section 501(r) has been implemented.

By Diane Freda

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