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IRS Issues Final Determination That Health Care Entity Is Not Exempt; Rather Is a Cooperative Enterprise That Provides Private Benefits to Members
The IRS has issued another final determination in which it has concluded that an entity that gathers, analyzes, and reports health care data to its members who, in turn, used this information to reduce their costs of providing health benefits to their employees or clients is not an exempt organization but is, in effect, a cooperative enterprise. PLR 200944063 (dated July 21, 2009, and publicly released October 30, 2009).
These findings are similar to those in a previously released IRS final determination (see
TaxNewsFlash-Cooperatives 2009-10).
The IRS noted that the entity did not provide health care services directly to patients, but that it provided health care information and data to its members who used that information to reduce their costs of providing health care. The IRS explained that while these activities may indirectly promote healthcare in a general sense, they do not primarily promote health care in a charitable manner under section 501(c)(3). The IRS also rejected the entity’s claims that its activities qualified as educational or scientific research activities under section 501(c)(3) and the regulations.
For an electronic version of the letter ruling:
PLR 200944063
For more information, contact KPMG’s National Director of Cooperative Tax Services:
David Antoni, in Philadelphia, (267) 256-1627,
dantoni@kpmg.com
Or Associate National Director of KPMG’s Cooperative Tax Services
Brett Huston, in Sacramento, 916 554 1654, bhuston@kpmg.com
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