Opinion ID: 163334
Heading Depth: 4
Heading Rank: 2

Heading: Defining community benefit

Text: 37 In giving form to the community-benefit standard, we stress that not every activity that promotes health supports tax exemption under § 501(c)(3). For example, selling prescription pharmaceuticals certainly promotes health, but pharmacies cannot qualify for ... exemption under § 501(c)(3) on that basis alone. Rev. Rul. 98-15, 1998 WL 89783. In other words, engaging in an activity that promotes health, standing alone, offers an insufficient indicium of an organization's purpose. Numerous for-profit enterprises offer products or services that promote health. 38 Similarly, the IRS rulings in 69-545 and 83-157 demonstrate that an organization cannot satisfy the community-benefit requirement based solely on the fact that it offers health-care services to all in the community 17 in exchange for a fee. 18 Although providing health-care products or services to all in the community is necessary under those rulings, it is insufficient, standing alone, to qualify for tax exemption under section 501(c)(3). Rather, the organization must provide some additional plus. 39 This plus is perhaps best characterized as a benefit which the society or the community may not itself choose or be able to provide, or which supplements and advances the work of public institutions already supported by tax revenues. Bob Jones Univ., 461 U.S. at 591, 103 S.Ct. 2017. Concerning the former, the IRS rulings provide a number of examples: providing free or below-cost services, see Rev. Rul. 56-185; maintaining an emergency room open to all, regardless of ability to pay, see Rev. Rul. 69-545; and devoting surpluses to research, education, and medical training, see Rev. Rul. 83-157. These services fall under the general umbrella of positive externalities or public goods. Bloche, supra, at 312. 19 Concerning the latter, the primary way in which health-care providers advance government-funded endeavors is the servicing of the Medicaid and Medicare populations. 40