The U.S. Treasury Department and IRS released a version of final regulations connected to the 2017 Tax Cuts and Jobs Act, providing some insight into the classification of facilities such as ASCs and outpatient radiology centers.
KPMG published a report examining the regulations. What you should know:
1. Released Jan. 18 under section 199A, the final regulations address requests for additional guidance on the definition of "performance of services in the field of health." The rules eliminate a requirement that services must be performed "directly" to a patient to be classified as services performed in the field of health.
2. The regulations acknowledge facilities like ASCs and outpatient radiology centers provide multifaceted services. However, the agencies don't "provide any bright-line rules on the treatment of these providers and facilities," according to KPMG.
3. A facts-and-circumstances inquiry must be launched to determine whether a trade or business is performing services in the field of health.
4. In the following example, a specialty surgery center would not be classified as services performed in the field of health under the section 199A definition:
"A private organization owns and operates surgery centers that provide outpatient medical procedures. For each facility, the surgery center operator manages the facility, performs all administrative functions and bills patients for facility costs related to their procedures. The surgery center does not employ physicians, nurses or medical assistants, but instead enters into agreements with professional medical organizations and medical professionals to perform procedures and provide all medical care. The healthcare professionals bill patients directly for the costs of the procedure conducted by the physician and medical support team."
5. Whether the taxpayer employs healthcare professionals seems to be an important factor in determining whether a facility provides services in the field of health, according to KPMG.
Click here to read the KPMG report: Analysis and observations of final section 199A regulations.
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