IRS issues FAQ on taxation of provider relief payments

The Internal Revenue Service July 6 issued a clarification on the tax treatment of funds received from the Provider Relief Fund. According to the FAQs, if the recipient is a taxable provider, the payments are taxable. If the provider is tax-exempt, the payments are not subject to tax unless the payment is reimbursement to the provider for lost revenue from an unrelated trade or business. Nearly 20 health care provider organizations, including the AHA, June 25 urged Congress to enact legislation to clarify that relief funds provided through the Public Health and Social Services Emergency Fund and other programs as part of the nation's response to the COVID-19 pandemic are exempt from taxation, and that entities receiving them maintain the tax deductions attributable to these funds.