Question: What do the IRS instructions say about subsidized services?
Response: The Internal Revenue Service instructions for Form 990, Schedule H direct that to be reported as a subsidized service, the service must:
- Meet an identified community need. Criteria for demonstrating community need include:
- If the organization no longer offered the service, it would be unavailable in the community
- If the organization no longer offered the service, the community's capacity to provide the service would be below the community's need; or
- If the organization no longer offered the service, the service would become the responsibility of government or another tax-exempt organization.
- The expense of the service must be subsidized after subtracting the cost of charity care, bad debt and losses from Medicaid and other means-tested government programs.