February 6, 2013
DeBoer: Religious Hospitals and the Federal Community Benefit Standard
Michael J. DeBoer (Faulkner), Religious Hospitals and the Federal Community Benefit Standard -- Counting Religious Purpose as a Tax-Exemption Factor for Hospitals, 42 Seton Hall L. Rev. 1549 (2012):
This Article argues that this inattention to the religious identities and missions of religious hospitals should end, and it recommends that the religious purpose of religious hospitals should be explicitly counted for purposes of determining tax exemption under federal corporate income tax law as well as state tax law. This argument is premised upon the special protections secured to religious institutions under federal and state constitutions, the history of tax exemptions extended to religious and charitable institutions, the separate enumeration of religious purpose as an exempt purpose in § 501(c)(3) of the Internal Revenue Code, and the important role of nonprofit organizations in American society. This Article develops this argument in several steps. First, it traces some of the historical background regarding the tax exemption of nonprofit and religious hospitals in the United States, including the development of the community benefit standard. Second, it examines recent federal legislative and regulatory initiatives, including the Affordable Care Act, that have amplified the community benefit standard with additional requirements that hospitals must meet to qualify for and retain tax-exempt status under federal income tax law. Third, it offers a range of reasons that support counting the religious purpose of religious hospitals for determining tax-exempt status. Fourth, it sets forth a typology of nonprofit hospitals and offers two sets of proposals—the first suggesting revisions to federal income tax exemption law and regulation, and the second encouraging religious hospitals to make their religious purpose more evident in their organizations and operations.
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