1. This handout was developed to illustrate the application of the transition relief for the adoption of a hospital facility’s first implementation strategy as described in the Internal Revenue Service’s proposed rules published in April 2013. The IRS’s description of the transition relief turns upon the taxable year after March 23, 2010 in which a hospital facility “conducts” (i.e., widely publicizes) its first CHNA. The proposed rules state the following regarding transition relief: “i. CHNA Conducted in Taxable Year Beginning Before March 23, 2012 These proposed regulations provide that a hospital facility that conducted a CHNA described in section 501(r)(3) in either of its first two taxable years beginning after March 23, 2010, does not need to meet the requirements of section 501(r)(3) again until the third taxable year following the taxable year in which the hospital facility conducted the CHNA. To qualify for this transition relief, the hospital facility must adopt an implementation strategy to meet the community health needs identified through the CHNA conducted in its first taxable year beginning after March 23, 2010 or 2011 on or before the 15th day of the fifth calendar month following the close of its first taxable year beginning after March 23, 2012. Thus, for example, if a hospital facility reporting on a calendar-year basis conducts a CHNA in 2012 and adopts an implementation strategy for that CHNA on or before May 15, 2014, it does not need to meet the section 501(r)(3) requirements again until 2015. ii. CHNA Conducted in First Taxable Year Beginning After March 23, 2012 If a hospital facility conducts a CHNA described in section 501(r)(3) in its first taxable year beginning after March 23, 2012, these proposed regulations provide that the hospital facility will be deemed to satisfy the requirement to adopt an implementation strategy in the same taxable year the CHNA is conducted if an authorized body of the hospital facility adopts an implementation strategy to meet the community health needs identified through that CHNA on or before the 15th day of the fifth calendar month following the close of its first taxable year beginning after March 23, 2012.” The following provide two examples of the application of the above rules (1) for those who have a taxable year beginning on January 1 and (2) for those who have a taxable year beginning on July 1. This information is being provided for informational purposes only and should not be considered tax or legal advice. Developed by the Catholic Health Association June 17, 2013

2. AND, next CHNA required to be conducted in 3rd taxable year following taxable year in which initial CHNA conducted. Transition Rules: For Hospitals That Have Not Adopted Implementation Strategy As Of October 5, 2013 Example: Taxable Year: January 1 - December 31 Jan 1, 2011Jan 1, 2012Jan 1, 2013May 15, 2014 First Taxable Year After March 23, 2010 Second Taxable Year After March 23, 2010 IF CHNA conducted during this period (i.e. widely publicized) THEN, Implementation Strategy must be adopted on or before May 15, 2014 Jan 1, 2014 First Taxable Year After March 23, 2012 THEN, Implementation strategy must be adopted on or before May 15, 2014 IF CHNA conducted during this period (i.e. widely publicized) CHNA and Implementation Strategy can meet requirements of either Notice 2011-52 or proposed rules and still qualify for transition relief; however, preferable to meet proposed rules requirements for Implementation Strategy. Source: “Community Health Needs Assessments for Charitable Hospitals; Notice of proposed rulemaking,” 78 Federal Register 66 (5 April 2013), pp. 20535-20536. OR

3. AND, next CHNA required to be conducted in 3rd taxable year following taxable year in which initial CHNA conducted. Transition Rules: For Hospitals That Have Not Adopted Implementation Strategy As Of October 5, 2013 Example: Taxable Year: July 1 – June 30 July 1, 2010July 1, 2011July 1, 2012November 15, 2013 First Taxable Year After March 23, 2010 Second Taxable Year After March 23, 2010 IF CHNA conducted during this period (i.e. widely publicized) THEN, Implementation Strategy must be adopted on or November 15, 2013 CHNA and Implementation Strategy can meet requirements of either Notice 2011-52 or proposed rules and still qualify for transition relief; however, preferable to meet proposed rules requirements for Implementation Strategy. July 1, 2013 First Taxable Year After March 23, 2012 THEN, Implementation Strategy must be adopted on or before November 15, 2013 IF CHNA conducted during this period (i.e. widely publicized) OR Source: “Community Health Needs Assessments for Charitable Hospitals; Notice of proposed rulemaking,” 78 Federal Register 66 (5 April 2013), pp. 20535-20536.