Tax Court Declines Chance to Define Boundary of 501(c)(4) Exemption
Group denied exemption because primary and substantial purpose is to benefit commercial insurers and health care providers
The Tax Court has declined to take the opportunity to decide whether a “substantial” non-qualifying purpose is sufficient to deny exemption as a 501(c)(4) social welfare organization or whether the non-qualifying activity must be the “primary” activity of the organization. In affirming an Internal Revenue Service denial of exemption to an Accountable Care Organization in Texas, the Court said that its activities “primarily benefit commercial [health insurance] payors and healthcare providers and thereby constitute a substantial nonexempt purpose precluding [the organization] from qualifying as an organization described by section 501(c)(4).” Memorial Hermann Accountable Care Organization (...
