Accounting
IRS faces challenges overseeing tax-exempt hospitals
The Internal Revenue Service has been facing
The
Other factors, including whether a hospital provides financial assistance to those unable to pay, are relevant in determining whether a hospital is providing a benefit to the community, the report noted. However, the Internal Revenue Code doesn’t specify what eligibility criteria or level of assistance provided is considered to be adequate for a financial assistance policy to meet the statutory requirements. “Vague or unclear eligibility criteria could potentially cause confusion for patients and inconsistent application of the requirements across hospitals,” said the report.
In April 2022, the IRS revised the scope of its CBARs to focus only on the Affordable Care Act’s statutorily required community benefit standard. As a result, examination referrals dropped 98% from fiscal years 2022 through 2024.
To address the reduced amount of oversight due to the streamlined CBAR process, the IRS implemented a compliance strategy that aimed to identify potential noncompliance by tax-exempt hospitals. Using the IRS’s data, TIGTA did an analysis of the available filing information to identify tax-exempt hospitals potentially subject to the CBARs and compared it to the IRS’s population of tax-exempt hospitals. TIGTA identified 142 missing tax-exempt hospitals that the IRS should have included in its population but weren’t identified or reviewed. In addition, the IRS excluded 14 governmental unit and 13 church-affiliated hospitals from the population for other reasons.
TIGTA made four recommendations in the report, suggesting the Treasury Department’s Office of Tax Policy consider a legislative proposal to amend Section 501 of the Internal Revenue Code and any other required provisions of law to define the community benefit standard and establish baseline criteria for tax-exempt hospital financial assistance policy eligibility. TIGTA also recommended the IRS should update its guidance to include reasons for excluding dual status governmental unit and certain church-affiliated hospitals from the CBARs because they are statutorily mandated. The IRS agreed with all four of TIGTA’s recommendations and plans to implement corrective actions.
“The IRS appreciates TIGTA’s analysis and the opportunity to consider improvements in the tax administration of tax-exempt hospitals,” wrote Robert Choi, acting commissioner of the IRS’s Tax-Exempt and Government Entities Division. He pointed out that the Government Accountability Office agreed with TIGTA that Congress should consider specifying in the Internal Revenue Code what services and activities it considers sufficient community benefit to improve the IRS’s ability to oversee tax-exempt hospitals.That would enable the IRS to issue updated regulations that provide more specific guidance.
However, the IRS will likely face difficulties given the
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Accounting
Mid-year moves: Why placed-in-service dates matter more than ever for cost segregation planning
In the world of depreciation planning, one small timing detail continues to fly under the radar — and it’s costing taxpayers serious money.
Most people fixate on what a property costs or how much they can write off. But the placed-in-service date — when the IRS considers a property ready and available for use — plays a crucial role in determining bonus depreciation eligibility for cost segregation studies.
And as bonus depreciation continues to phase out (or possibly bounce back), that timing has never been more important.
Why placed-in-service timing gets overlooked
The IRS defines “placed in service” as the moment a property is ready and available for its intended use.
For rentals, that means:
- It’s available for move-in, and,
- It’s listed or actively being shown.
But in practice, this definition gets misapplied. Some real estate owners assume the closing date is enough. Others delay listing the property until after the new year, missing key depreciation opportunities.
And that gap between intent and readiness? That’s where deductions quietly slip away.
Bonus depreciation: The clock is ticking
Under current law, bonus depreciation is tapering fast:
- 2024: 60%
- 2025: 40%
- 2026: 20%
- 2027: 0%
The difference between a property placed in service on December 31 versus January 2 can translate into tens of thousands in immediate deductions.
And just to make things more interesting — on May 9, the House Ways and Means Committee released a draft bill that would reinstate 100% bonus depreciation retroactive to Jan. 20, 2025. (The
The result? Accountants now have to think in two timelines:
- What the current rules say;
- What Congress might say a few months from now.
It’s a tricky season to navigate — but also one where proactive advice carries real weight.
Typical scenarios where timing matters
Placed-in-service missteps don’t always show up on a tax return — but they quietly erode what could’ve been better results. Some common examples:
- End-of-year closings where the property isn’t listed or rent-ready until January.
- Short-term rentals delayed by renovation punch lists or permitting hang-ups.
- Commercial buildings waiting on tenant improvements before becoming operational.
Each of these cases may involve a difference of just a few days — but that’s enough to miss a year’s bonus depreciation percentage.
Planning moves for the second half of the year
As Q3 and Q4 approach, here are a few moves worth making:
- Confirm the service-readiness timeline with clients acquiring property in the second half of the year.
- Educate on what “in service” really means — closing isn’t enough.
- Create a checklist for documentation: utilities on, photos of rent-ready condition, listings or lease activity.
- Track bonus depreciation eligibility relative to current and potential legislative shifts.
For properties acquired late in the year, encourage clients to fast-track final steps. The tax impact of being placed in service by December 31 versus January 2 is larger than most realize.
If the window closes, there’s still value
Even if a property misses bonus depreciation, cost segregation still creates long-term savings — especially for high-income earners.
Partial-year depreciation still applies, and in some cases, Form 3115 can allow for catch-up depreciation in future years. The strategy may shift, but the opportunity doesn’t disappear.
Placed-in-service dates don’t usually show up on investor spreadsheets. But they’re one of the most controllable levers in maximizing tax savings. For CPAs and advisors, helping clients navigate that timing correctly can deliver outsized results.
Because at the end of the day, smart tax planning isn’t just about what you buy — it’s about when you put it to work.
South Africa’s case against executives in the biggest corporate fraud in the country’s history will be moved to a higher court for complex criminal trials, with their next hearing also pushed back to September.
Stéhan Grobler, the head of treasury at Steinhoff International Holdings NV when the furniture giant unraveled almost eight years ago, received extended bail along with two other former executives at Steinhoff subsidiaries and affiliates at a hearing in the Specialized Commercial Crimes Court in Pretoria on Friday.
Their case will be moved to the High Court, with their next hearing scheduled for Sept. 3 when a trial date is likely to be set.
The extra time will allow the prosecution to finalize investigations and secure a racketeering certificate, according to court proceedings, while prosecutors were also waiting for an affidavit from witnesses in Germany that arrived on Friday. A finalized charge sheet will be ready by June 17.
Grobler says he’s innocent of charges already set out by prosecutors including racketeering, manipulation of financial statements and three counts of fraud worth 21 billion rand ($1.2 billion).
The collapse of Steinhoff, once feted for a gutsy entrepreneurial spirit that built a retail empire spanning Australia, Europe and the U.S., rocked South Africa as the company’s share price collapsed in December 2017, hitting everyone from staff and creditors to the government workers’ pension fund. About 230 billion rand was lost on the Johannesburg stock exchange in a matter of days.
Pressure has been building on prosecutors, especially after a 7,000-page report on Steinhoff’s dealings — compiled by auditor PwC in the wake of its collapse — was finally released six months ago. Former Chief Financial Officer Ben la Grange is the most senior Steinhoff executive to be jailed so far, but his plea deal last year — including a requirement to testify in the Grobler case — meant the scandal has yet to be fully aired in court.
Former Chief Executive Officer Markus Jooste died by suicide in March 2024.
Steinhoff, which owned Conforama in France and Mattress Firm in the U.S., collapsed after auditors refused to sign off on its financial statements. That led to the start of police and regulatory investigations in both Europe and South Africa. The probe by auditor PwC uncovered €6.5 billion ($7.4 billion) of irregular transactions with eight firms over eight years.
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