For-profit providers pay taxes on COVID-19 benefits

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The IRS clarifies that for-profit health care providers will pay taxes on the grants they receive from the Supplier Relief Fund COVID-19.

The two laws set aside $ 175 billion in funding to help suppliers cover lost revenue and coronavirus-related expenses did not make it clear that the amounts would be taxable. However, The IRS issues instructions Stating that the grants are taxable income day before the deadline for tax return on July 15. This change means funding for nonprofit healthcare providers including hospitals and Independent physicians will be subject to the company's 21% tax rate.

"Doctors or hospitals will be required to return an average of 21 cents per relief, while large tax-exempt hospitals will receive 100 cents on the dollar when everyone suffers the same loss." , Said CEO of the American Hospital Association Chip Kahn. "It is unfair and will lead to an uneven playing field."

Some for-profit providers have hoped that grants can be classified as qualifying disaster relief payments, but the IRS says grants must be included in total income. Exempt suppliers will not be taxed on grants unless they reimburse suppliers for lost revenue for an unrelated business or business.

Jennifer Breen, a partner at Morgan, Lewis, said: "Initially, it was denied that this could be taxable because it did not seem to fit the spirit of the law to create liquidity to help hospitals and medical providers ". ..


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