Tax Traps for Health System Parent Entities

Law360, New York (April 27, 2007, 12:00 AM EDT) -- The Pension Protection Act of 2006 (the “Act”), enacted in August 2006, addressed a broad array of topics, including provisions aimed at addressing perceived abuses associated with certain Section 501(c)(3) organizations.

Those organizations, known as “supporting organizations,” are classified as public charities under Section 509(a)(3), based on their essential purpose and function of supporting other charitable organizations.

In the health care context, most health systems having a “parent” entity will find that it is classified as a Section 509(a)(3) supporting organization based on its role in...
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