Corporate/
Business Organizations and Tax-exempt Entities
(Representative
Clients/ Legal Projects, Attorneys)
May a tax-exempt hospital enter into a joint venture with a group of physicians on its medical staff to operate an ambulatory surgery center or a similar facility?
A tax-exempt hospital may form a joint venture with physicians, but this is an area of significant concern to the IRS and it has addressed the topic several times in the past few years. In several rulings the IRS has emphasized the following as key elements for any such joint venture.
1. The joint venture organizing documents must contain provisions directing operation of the venture in furtherance of the charitable purposes of the tax-exempt entity, which must take precedence over a profit motive.
2. The tax-exempt entity must have sufficient control to assure that profit motives do not subvert the charitable mission.
3. Ownership in the joint venture must be proportionate to actual contributions, and the contributions must be valued properly.
4. If the for-profit member manages the day-to-day operations of the joint venture, there must be a fair and reasonable contract which requires that the management be in furtherance of charitable purposes and which allows the tax-exempt entity to cancel the contract if it believes charitable purposes are not being followed.
An ambulatory surgery center joint venture should also be structured if at all possible to meet the Safe Harbor regulations under the anti-kickback statute.
Representative
Clients/ Legal Projects, Attorneys
Tax-exempt / Non-profit and Charitable Organizations
- Contracting
- Entity Formation and Obtaining Tax Exemption
- Federal Research Compliance Issues (Assurance, Common Rule and FDA)
- Grant Funding Issues
- Human Resources Issues
- IRS Intermediate Sanctions
- Mergers/Conversions
- Physician Recruitment and Compensation
- Risk Management
- State Nonprofit Law
- Tax-Exempt Financing
- Tax Exemption Issues
- Unrelated Business Income Tax
For-profit Corporations / Businesses
- Buy-Sell Agreements
- Contracting
- Debt and Equity Financing
- EEOC
- Employment Agreements
- Employment/Human Resources Issues
- Entity Selection and Formation
- Federal Research Compliance Issues (Assurance, Common Rule and FDA)
- General Litigation
- Government Regulatory Concerns
- Joint Ventures
- RS Intermediate Sanctions
- Licensing
- Litigation
- Mergers and Acquisitions
- Private Offerings and Securities Issues
- Real Estate/Leasing
- Physician Recruitment and Compensation
- Risk Management
- Unrelated Business Income Tax
Attorneys practicing in this area:
Wallis S. Stromberg, Henry C. Cleveland,
III, Barbara L. Crawford, Michael M.
Schmidt, Paul D. Godec, Taylor T.
Pollock, Walter J. Landen
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