SECTION 5. SCOPE

.01 In general. A hospital organization may use the provisions of this revenue procedure to correct and disclose any failure to meet a requirement of § 501(r) that is not willful or egregious, subject to the conditions of section 5.02 of this revenue procedure.

.02 Effect of exam. In the case of a hospital organization that is contacted by the IRS concerning an examination of the organization, the hospital organization may use the provisions of this revenue

procedure to correct and disclose a § 501(r) failure only if, at the time the organization is first contacted by the IRS, the following conditions are satisfied:

(1) The hospital organization has corrected or is in the process of correcting the failure in accordance with section 6 of this revenue procedure; and

(2) If the due date (allowing for extensions) for the annual return for the tax year in which the failure was discovered has passed (or would have passed, in the case of a hospital organization that is not required to file an annual return), the hospital organization has already disclosed the failure in accordance with section 7 of this revenue procedure.

.03 Minor and Inadvertent Omissions and Errors. Under § 1.501(r)–2(b), a hospital facility’s omission or error with respect to the requirements of § 1.501(r)–3 through § 1.501(r)–6 will not be considered a failure to meet a requirement of § 501(r) if such omission or error was minor and either inadvertent or due to reasonable cause and the hospital facility corrects such omission or error in accordance with § 1.501(r)–2(b). Because minor omissions and errors that are either inadvertent or due to reasonable cause and are corrected in accordance with § 1.501(r)–2(b) are not considered failures to meet a requirement of § 501(r), hospital organizations do not need to use the correction and disclosure procedures described in this revenue procedure for such omissions and errors. However, an organization that wants to correct such a minor omission or error may rely on the principles regarding correction described in section 6 of this revenue procedure in meeting the correction requirements of § 1.501(r)–2(b)(1)(ii). ¹ This section 5.03 may be illustrated by the following examples:

(1) A hospital facility’s CHNA report or FAP is unavailable on a Web site for a short period of time due to an inadvertent technological malfunction. Promptly upon discovery of the technological malfunction, the hospital facility corrects the error by ensuring that the CHNA report or FAP is available on its Web site and reviews its relevant practices and procedures and determines that no revisions are necessary to prevent this type of error from recurring.

1In addition, § 1.501(r)–2(a)(8) provides that, for purposes of determining whether to continue to recognize the § 501(c)(3) status of a hospital organization, the IRS will consider whether a hospital organization corrected a failure as promptly after discovery as was reasonable given the nature of the failure. A hospital organization that cannot or does not have an error or omission excused by following the correction and disclosure procedures outlined in this revenue procedure may nevertheless use the principles regarding correction described in section 6 of this revenue procedure in demonstrating that they satisfy the factor described in § 1.501(r)–2(a)(8).

March 30, 2015 818 Bulletin No. 2015–13

Because the error was minor and inadvertent and the hospital facility corrects the error promptly upon discovery in accordance with § 1.501(r)–2(b)(1)(ii), the error would not be considered a failure to meet the requirements of § 501(r) and, thus, would be outside the scope of this revenue procedure.

(2) A hospital facility’s usual signage about its FAP is not conspicuously displayed in its emergency room for a short period of time because an inadvertent disruption results in the signs falling down or being obstructed. The hospital facility corrects the error promptly upon discovery by replacing the signs or removing the obstruction and reviews its relevant practices and procedures and determines that no revisions are necessary to prevent this type of error from recurring. Because the error was minor and inadvertent and the hospital facility corrects the error promptly upon discovery in accordance with § 1.501(r)–2(b)(1)(ii), the error would not be considered a failure to meet the requirements of § 501(r) and, thus, would be outside the scope of this revenue procedure.

.04 Willful or egregious. A failure that is willful includes a failure due to gross negligence, reckless disregard, or willful neglect. An egregious failure includes only a very serious failure, taking into account the severity of the impact and the number of affected persons. Whether a failure is willful or egregious will be determined based on all of the facts and circumstances. A hospital organization’s correction and disclosure of a failure in accordance with sections 6 and 7 of this revenue procedure is a factor tending to show that the failure was not willful.