A contemporary reexamination of revenue ruling 69-545 and the promotion of health rationale for exemption.
In recent years, Revenue Ruling 69-545 has generated considerable discussion about what is necessary to satisfy the "promotion of health" standard of charitable exemption under Section 501(c)(3). This Article reviews the development of the standards of exemption applicable to nonprofit hospitals, including Revenue Ruling 56-185 and Revenue Ruling 83-157. It then provides a detailed discussion of Revenue Ruling 69-545 and sets forth the author's view on how the Ruling's factual elements should be interpreted. The author concludes that the promotion of health rationale should not be limited by treating the fact patterns of Revenue Ruling 69-545 as prescriptive of a multifaceted test of exemption, or by seeking to impose a mandatory charity care requirement as a precondition of exemption. Rather, a flexible approach to promotion of health should be embraced by the Internal Revenue Service (IRS), practitioners, and the courts.