Two influential senators have called on the IRS to update the tax forms used by tax-exempt organizations and charities to increase transparency and make it harder to hide critical financial information.
In a letter sent Tuesday to Treasury Secretary Henry Paulson, Sens. Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa), the chairman and ranking member of the Senate Finance Committee respectively, said that the current Form 990 and Form 990 PF filed by charities are outdated and ripe with potential loopholes that tax-exempt organizationsincluding hospitalscan use to hide pertinent information about executive compensation, donations, joint ventures and governance.
While we always hear that sunshine is the best disinfectant, sunshine cant do its work unless we open the blinds, Grassley and Baucus wrote in the letter, which was also sent to Acting IRS Commissioner Kevin Brown. The sooner we open the blinds, the better.
Grassley has long called on the IRS to increase its oversight of tax-exempt and charitable hospitals. Last year, he asked the IRS to step up enforcement after a raft of tax-exempt hospitals started to operate more like for-profit businesses with only a marginal nod to community benefits and other programs required by law to ensure the favorable tax status.
Specifically, the senators said that they want hospitals that engage in billing and debt collection to be required to outline the procedures they follow.
The letter states that the Form 990 is not adequate to encompass vital information regarding major parts of the nonprofit sectorespecially hospitals and universities. -- by Matthew DoBias