Proposed New IRS Reporting Requirements for Nonprofit Hospitals

A Congressional discussion draft released May 12, 2026, would significantly expand the information that tax-exempt hospitals must report annually on their Form 990. The draft amends Section 6033 of the Internal Revenue Code by adding a new subsection (p) and would apply to every organization described in IRS Code Section 501(r)(2) that is required to file a Form 990. This is the third in a series of recent developments surrounding proposed changes to the Form 990 for all IRS Code Section 501(c)(3) organizations and specifically to tax-exempt hospitals.

The Treasury Department announced on April 23, 2026, a new initiative to revise Form 990, aimed at increasing transparency and accountability for tax‑exempt organizations, including more clearer reporting on

Government grants
Government contracts
Fiscal sponsorship arrangements

The Congressional Research Service, a group of non-partisan shared staff, released on March 30, 2026, a summary entitled Nonprofit Hospitals, Tax Benefits, and Charity Care. The summary addressed the following and noted potential options for revisions prospectively:

Requirements for Tax-Exempt Status
Value of Federal Tax Benefits
Value of Charity Care
Comparison to For-Profit Hospitals
Options for Revision
A minimum charity care requirement
Legislative clarity about the definition of Community Benefit
Improvements in IRS Reporting, Oversight and Enforcement
An Excise Tax on Financial Assets

Caution: This is a discussion draft only and subject to revisions — not enacted law. Several provisions remain undefined and are subject to change.

Other Key Points

Definitions pending charity care, advertising, quality improvement, nonclinical programming, and health service line are all marked “TBD” in the draft.
Covered Outpatient Drug – means the term as defined in Section 340B(b) of the Public Health Service Act.
340B “net revenue” is defined as the difference between total pay or payments received for a drug and its 340B ceiling price (or acquisition cost, if lower).
Items 3 and 4 – above signal areas still under active negotiation and most likely to change.

Timing and Effective Date

The draft was circulated May 12, 2026.
If enacted, the requirements would apply to taxable years beginning after the date that is 6 months after enactment.

What This Means for You

Nonprofit hospitals should begin assessing whether current systems can capture facility-level detail on community benefit spending, financial assistance, and 340B economics. Early data-readiness planning will be critical given the potentially compressed effective-date window.