IRS Provides Updated Guidance on Provider Relief Funds

July 22, 2020 | Insights

By Denise Rose

Last week, the IRS clarified in a Frequently Asked Questions memo that for-profit healthcare providers who received grants through the COVID-19 Provider Relief Fund must include said payments as part of their gross income under 26 USC 61.

Neither the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which created the $100 billion Provider Relief Fund, nor the Paycheck Protection Program and Health Care Enhancement Act, which added an additional $75 billion to the Fund, specifically provided that receipt of these funds would be taxable, and the announcement came as a surprise to many providers.

The impact of this guidance means that hospitals and some independent physician practice groups who received these funds will be subject to the 21 percent corporate tax rate and will not be able to count them as “qualified disaster relief payments” under 26 USC 139. The IRS further clarified, however, that tax-exempt providers are not subject to a tax if they received Provider Relief Funds unless they were used to reimburse that provider for expenses or lost revenue.

Meet Denise

Denise Rose has been working in and around the Texas Capitol for over a decade. She is extremely well-versed in the legislative and appropriations processes, and has cultivated relationships throughout the Texas Capitol and in state agencies. Denise provides effective strategic counsel to clients on a wide variety of issues, including but not limited to Medicaid and hospital finance, special utility districts, occupational licensing, health care quality, and agency rulemaking processes and requests for proposals.

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Please note: This article and any resources presented on the JW Coronavirus Insights & Resources site are for informational purposes only, do not constitute legal or medical advice, and are not a substitute for legal advice from qualified counsel. The laws of other states and nations may be entirely different from what is described. Your use of these materials does not create an attorney-client relationship between you and Jackson Walker. The facts and results of each case will vary, and no particular result can be guaranteed.