Report 2007-107 All Recommendation Responses

Report 2007-107: Nonprofit Hospitals: Inconsistent Data Obscure the Economic Value of Their Benefit to Communities, and the Franchise Tax Board Could More Closely Monitor Their Tax-Exempt Status (Release Date: December 2007)

Recommendation #1 To: Equalization, Board of

To ensure that it provides accurate information regarding the value of property that is tax exempt, Equalization should consider including in its surveys of the county tax assessors a process for verifying the accuracy of the values reported on the annual statistical reports submitted by the county assessors.

Recommendation #2 To: Franchise Tax Board

After it identifies the staff resources that are no longer required for reviewing tax exemption applications, the tax board should implement its plan to use those resources for performing audits of tax-exempt entities, including hospitals.

Recommendation #3 To: Franchise Tax Board

The tax board should consider developing methodologies to monitor nonprofit hospitals? continuing eligibility for income tax exemption. These methodologies should include reviewing the financial data and other information on the Form 199 annually submitted by tax-exempt hospitals.

Recommendation #4 To: Franchise Tax Board

The tax board should consider developing methodologies to monitor nonprofit hospitals? continuing eligibility for income tax exemption. These methodologies should include ensuring that the annual Form 199 contains all the information required to determine eligibility for an income tax exemption in accordance with state law.

Recommendation #5 To: Franchise Tax Board

The tax board should consider developing methodologies to monitor nonprofit hospitals? continuing eligibility for income tax exemption. These methodologies should include tracking complaints in a manner that allows it to identify potential trends in a tax-exempt hospital?s noncompliance with the law and initiate audits of such hospitals.

Recommendation #6 To: Franchise Tax Board

The tax board should consider developing methodologies to monitor nonprofit hospitals? continuing eligibility for income tax exemption. These methodologies should include adequately identifying tax-exempt hospitals in its automated database so it can use the information in the database to profile those hospitals and identify any potential noncompliance with the law.

Recommendation #7 To: Franchise Tax Board

The tax board should gain an understanding of the frequency and depth of IRS audits of tax-exempt hospitals to identify the extent to which it can rely on IRS audits and factor that reliance into its monitoring efforts.

All Recommendations in 2007-107

Agency responses received after June 2013 are posted verbatim.


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