Georgia Rural Hospital Tax Credit Information
In April 2016, Gov. Nathan Deal signed the Rural Hospital Tax Credit (HB919/SB258). DCH will be providing guidance on complying with the bill’s guidelines as established and published. In order to help facilitate the dissemination of pertinent information and empower Georgia hospitals to capitalize on this unique opportunity, HomeTown Health has compiled the following FAQs and Recommendations.
On August 15, 2016, the Georgia Department of Revenue published Proposed Rule 560-7-8-.57, which sets forth the details relating to these processes. Although the Rule is not final, the Proposed Rule provides important guidance on what rural hospitals can expect in the way of administering the program.
What hospitals are eligible to participate?
What tax credits does the bill provide for?
- For individual taxpayers, tax credits are limited to 70% of the actual amount expended or $2,500 for an individual and $5,000 for couples, whichever is less.
- For corporations, tax credits are limited to 70% of the actual amount expended or 75% of the corporation’s income tax liability, whichever is less.
- Total aggregate tax credits allowed may not exceed $50 million in 2017, $60 million in 2018, and $70 million in 2019.
What should an eligible hospital be doing right now?
HomeTown Health currently advises that all eligible hospitals and healthcare systems visit the DCH website for the Rural Hospital Tax Credit to download the necessary forms. Facility leaders should be gathering information and working towards the completion of these forms by the deadlines established by DCH. (see section below or DCH website for these dates.) Based on current information, this process will be straight forward and simple enough for hospitals to complete without the use of consulting firms. (see link to Georgia Health News Article below)
What is the DCH website with pertinent information?
The DCH released its Rural Hospital Tax Credit page in a statement from Commissioner Clyde Reese on August 22, 2016. The webpage is https://dch.georgia.gov/rural-hospital-tax-credit and provides the most up-to-date information straight from DCH. The page provides links to
1. A list of 47 hospital organizations determined eligible to receive donations;
2. A financial proxy form required to be submitted to the Department by each eligible organization; and
3. A form detailing the content of a five year viability and stability plan required to be submitted to the Department by each eligible organization. Click here for instructions for acquiring your Dun & Bradstreet Supplier Qualifier Report.
View the website at: https://dch.georgia.gov/rural-hospital-tax-credit
What is the timeframe for submission of forms to DCH?
According to the DCH Statement via the website, the financial proxy form and the five year plan must be received by the Department on or before 5 pm on Monday, October 17, 2016. These items are to be submitted to Commissioner Reese’s Executive Assistant, Danisha Williams, at email@example.com
If any clarifying or additional information is needed, the hospital organization will be notified. The Department will review all submissions for sufficiency by November 17, 2016.
The information submitted on the financial proxy form and in the five year plan will be used to determine a ranking of eligible hospital organizations in order of financial need as required by the legislation. A list evidencing the order will be posted by the Department on December 1, 2016.
Has the 2017 Session affected the Bill?
An Amendment approved during the 2017 Session notes, in Section 2.b.1 increases the amount for allowed donations and the tax credit from 70% to 90%. View Amendment to the Bill (Passed in 2017 Session)
Recent Email Updates From Jimmy Lewis, CEO
From the Desk of Jimmy Lewis – May 2017:
There are many questions regarding the SB180 Tax Credit bill. Below are a few answers as best we know them.
1) SB180 has been signed by the Governor. It is law.
2) However the bill has not been incorporated into Department of Revenue language that specifies it in code.
a. DOR has many bills at one time to write into code so although it is a high priority, it takes time, thus
b. The language that spells out the 90% tax credit and the retroactive date back to January 1, 2017 has not been incorporated.
3) The old bill is still intact, in effect and incorporated as per signature and incorporation in 2016
4) What does this mean?
a. It means that at this point in time you do not have a new bill with which to teach your donors what to do nor how to do it.
i. The new bill language probably be incorporated into the code by end of June 2017 possibly a little earlier.
b. In the meantime you have two options to administer the bill and they are:
i. Do nothing until the Department of Revenue notifies you of the official code incorporation to prevent creating a confused donor base ( probably end of
ii. Sell the whole notion of tax credit to donors based on the old bill at 70% tax credit and get donors signed up and then have them to convert to the new
90% rate retroactive back to the January 1, 2017. Seems to confusing.
c. There have been a few donors to have done this.
d. From all we can hear it is better to wait until Department of Revenue gives the full green light to proceed with mew bill language to prevent any more
confusion than already may exist.
e. Although time is of the essence to implement, it is not recommended to engage the process at the risk of confusing the donor base.
5) Simply stated it seems better to wait until the Department of Revenue concludes its work in incorporating language for SB180 into the code before trying to engage donors or hold community meetings.
As a secondary part of this DCH has a similar charge and that is to
1) Re calculate the
a. Hospital Neediest list in order of need.
b. Recalculate the eligibility list based in the redefinition of rural for this bill at 50,000 population to include an approximate eight new hospitals.
c. Probably to be done within the same timeframe as DOR.
From the Desk of Jimmy Lewis – January 2017: Thank you for the many updates on your hospital’s participation in the tax credit bill SB258.
1) The Bill as written and passed has two parts
a. Concept and operational directives
b. The concept of tax credit assistance to rural hospitals has been lauded locally, statewide and nationally as a creative way to affect finance needs of rural hospitals
c. The operational directives have proven to be impractical because
i. The 70% threshold for tax credit does not provide Return on Investment attractiveness
ii. The Tax accounting may be too laborious for donors
2) Many of you have indicated that your local industry representatives have indicated interest but are prohibited from investing with the loss of 30% of the investment to non tax credit expenses
3) Many of you have said that in its current form , the concept is good, but the ability to raise money with these parameters makes the bill a “No Go” meaning that there will be little if any success for rural hospitals to gain donor traction, either individual or industry.
4) The bill is a product of a hard fought fight last year where many parties either wanted to kill it or get control of it for reasons and benefits other than for rural hospitals
5) The bill was distracted by the partnership of an outside consultant with an organization for a fee of 6% to be split between the two that offended many key legislators who have stuck their necks out to support it only to find some of the money potentially siphoned off from hospital uses
6) HomeTown was a major supporter of Rep Geoff Duncan’s bill from the start only to watch it get drastic revisions in the process
7) HomeTown in the last weeks and days has worked extensively in conversations with Representative Duncan to explain the value of the bill to audiences and its concept as in the recent USA Today Article recently where HomeTown worked extensively in the back ground with Rep Duncan
8) Within the last several weeks, HomeTown has been listening to your concerns with the bill as passed as you began planning work to raise money and have been sharing your concerns with Representative Duncan
9) Representative Duncan has listened carefully and had many developmental conversations on how to make the bill better while also visiting some rural hospitals to see firsthand the need and the very positive opportunity with the bill
1) Today at about 11 AM, after considerable language development, Representative Geoff Duncan introduced a new bill designed to address major issues and to offer fixes to the bill. As to whether these are the final fixes the important thing to know is that the debate is open and will be fully vetted.
2) While the bill was only dropped a few hours ago, there is not a copy available but the synopsis is as follows:
a. Bill will increase threshold from 70% to 90% for tax Credit
b. Bill would be retroactive back to Jan 1, 2017
c. Bill would change annual tax credit funding caps to $60 million annually for next three years
d. Levy strict transparency clauses to address the outside consultant issue
3) The bill will become a first reader tomorrow and will be available for review at the time
4) At that time the process proceeds in an attempt to further perfect the bill
1) Every effort will be made to prevent the kinds of distraction that occurred last year and to preserve the concept that included having the bill commandeered by outside industrial, corporate and consultant interests
2) There has been major recognition for the need for financial assistance for rural hospitals
3) Because of the some of the positions taken at their point in support of the previous bill, it may be difficult to try to kill it or alter it at the expense of the bills affectivity
4) It has been generally agreed that this is a rural hospital bill and not a vehicle for other potentially maligned reasons such as industry benefits or large hospital donors or vendor benefits
5) There definitely will be attempts to takeover or redirect the bill for purposes other than rural hospitals where large sums of corporate donor money can become the focus of the bill instead of the intended rural hospitals
1) Notify you legislators of the coming bill and seek their unfaltering support in moving this bill forward and not to get confused if others should arise.
2) Continue to send us your feedback and comments on the donor community as it pertains to the bill.
3) Bill copy will comes as soon as it is available
From the Desk of Jimmy Lewis – September 2016: Regarding the rural hospital tax credit bill, SB258, a press release was issued yesterday with statements from House Appropriations Chairman Terry England and House Ways and Means Chairman Jay Powell as well as Representative Geoff Duncan who authored the bill have given a warning to rural hospitals as to the use of this money as pointed out by Chairman Jay Powell – Chairman Powell added, for emphasis, “The program was designed so that all of the money would be used to support the hospitals with very little administrative effort required. There should be no need for any hospital to have to hire personnel or contract with outside consultants in order to take advantage of this program.”
The confusion has arisen because of the rise of consultants to intervene in the process to collect money on behalf for rural hospitals for a proposed 6% fee. HomeTown has chosen not to partner with any consultants for such initiatives for the reason pointed out in the press release. You have raised many questions about all of this through your emails and phone calls.
Quote from Pundit Charlie Harper – “Folks, those aren’t idle words. If the hospital in your community decides to pay someone 6% off the top of a program designed to get them a bit of a lifeline with additional funds, your Budget and Ways and Means Chairmen are not going to look favorably on your plight when you show up at the Capitol in January asking for even more money. If any hospital is confused about how to acquire these funds, it is strongly suggested they contact existing state agencies for assistance.”
Several questions that you have raised that have stirred interest include:
1) If money is collected from corporate donors from outside of the community, statewide or national… where does it go?
- Into a pool for distribution. If so…
- Who makes decisions on how the money is distributed, by what percentage of total, and to whom?
- Do the consultants do this alone – if so how is that process governed?
- Or is there a panel set up to distribute the money. If so who appoints the panel and by what authority?
- Are there other politics at play for the use of this money…
- Which hospitals get how much money?
- Does one hospital have preference over another?
- Do hospital’s locations and affiliations influence the percentage of money collected from “Atlanta” donors?
- How do the collections impact my hospital foundation efforts to raise money?
- Does the 6% apply to money collected by my hospital efforts. Who keeps up with that?
2) Is the 6% negotiable?
- How is the 6% split up, i.e., how many players, sponsors, and organizations can get part of this money if any?
3) Is there a transparency program that governs this collection/distribution of money’s collected using this Bill SB258.
These are but a few of the questions that you have raised. If you have other questions, please forward them into HomeTown for assembly and answers.
This clearly is a major subject of concern under the Gold Dome as evidenced by these legislators quoted in this press release. Notable is the fact also that a few weeks ago, Senate Appropriations Chairman Jack Hill made similar statements about consultants.
From The Desk of Jimmy Lewis – August 2016: This article by Georgia Health News corroborates the Admin Fees at 6% to be paid by the hospital. That is $10.8 million expenses over 3 years if consultants are used. That is the equivalent of the loss of one small hospital in Net Revenues to admin fees. The big question is who does that admin fee get split with.
Quote from Senator Jack Hill: “NOTE: This process will not be complicated. There is no reason for any hospital, individual or business to contract with or hire a third party vendor to receive the benefits of this tax credit. Please call me, the Department of Revenue or the Department of Community Health with any issues or questions at the appropriate time.”
From The Desk of Jimmy Lewis – July 2016
In response to many continued inquiries about what to be doing currently in preparation for the implementation of the SB 258 Tax Credit Bill for hospitals. The following update is offered as of Friday 7-08-2016. Also see attached earlier update.
1) See previous update attached!
2) SB 258 is a Tax Credit bill designed to help rural hospital cost of operations
3) For eligible hospitals there are annual caps on corporate donation per hospitals ($2 million annually) and individual donations( $2 million annual)
- This is designed to prevent collaboratives from taking disproportionate shares of donation capability that might be inordinately beneficial to larger corporate entities I instead of rural hospitals
4) There is however, NO official rural hospital eligibility list developed or published as yet by DCH, thus there is no reason for any rural hospital to be spending any money on procure consulting services because nobody knows who is eligible yet
5) The three year total for these tax credits is $180 million total ( $50 million – 2017, $60 million – 2018, and $70 million – 2019). That is a lot on money that will draw untold suitors to help you get money. Many will be scams and fly by night consultants. Beware prophets from a far !
6) While the bill has passed and has been signed by the Governor, the regulations HAVE NOT BEEN DEVELOPED AS OF YET.
- Speculation is that first round of regulations may be available for review mid August.
7) There are three basic areas of the bill requiring regulation development. They are:
- 5 Year plan design and requirement
- 990 from development for hospitals hat currently are not required to submitted 990’s
- Hospital eligibility list
B. Dept of Revenue
- Operational language pertaining to who, how, when, can donate and be accounted for
- Donor qualifications
C. Hospital Eligibility and budget maintenance
D. None of these have been published thus there is no value in spending any money on consultants at this point
8) Because this is such a large amount of money there will be many solicitors coming forward “to help your hospital navigate these waters”. These can appear as
- Individual consultants
- Collaborative consultants
- Syndicates to name a few
- Beware prophets from afar!
9) The bill as written is intended to direct as much money to the end user hospital as possible to prevent administrative loss such as commissions, finder’s fees, and syndicated admin fees.
- These fees can range for fixed fees to exorbitant fees variable to funds secured
- Representative Duncan intended to minimize these lost funds where DCH would be expected to write regulations that would preclude as much as possible this loss.
HomeTown will be prepared to vet any proposals for you as to viability, integrity of proposals, and cost of administration (how much your consultant will charge you) by comparing all market place proposals. HomeTown will be a central point of vetting the various options that are presented to your hospital. Thus as soon as you get contacted by any suitor please contact HomeTown and we can help you.
If you have any questions please let us know in the meantime it is better to wait and spend NO money on consultants for the Tax Credit Bill until regulations are officially posted by DCH!
From the Desk of Jimmy Lewis – June 2016
- The bill SB 258 as passed: http://www.legis.ga.gov/Legislation/20152016/162396.pdf
- DCH continues to develop regulations for the implementation of this bill
- There has been nothing published to date by DCH on regulations for his bill
- As of this date there is no official DCH sanctioned list of eligible hospitals
- Without the developed regulations nothing can done without being wasteful of implementation dollars
- There have been several communications or meetings discussing how to market and or collect from donors
- There are professional looking programs and phone calls being circulated about how and what to do to setup donor programs and five year plans
- There is no DCH authorized information available to warrant any action in this regard
- A call to the bill’s Author reminded us that the intent of the bill was to create the simplest and easiest method to set up the program possible without creating a heavy administrative burden to collect, account for and report activities associated with the bill
- At this point there should be no money being spent until DCH produces the final regulation lest again major money be wasted in establishing the program for naught
- Whenever there is this much money available it will draw unnecessary programs to be “helpers” to get the money. Better to wait to identify exactly what is required to set up the program.
- Collection and accounting programs can be very expensive thus unnecessarily taking part of the donations as administrative fees which is not the intent of the bill.
- Again the author in conversation with DCH expressed that the program be setup with a minimum administrative fee required
- Proposed Donor account programs from “helpers” may include using contingencies, or hourly, or project fees. Wait until clarity is achieved from DCH official publications before spending any money to set this program up.
- There will be a required adherence to a 990 submission for both 501c3 and governmental entities.
- There will be a five year plan required but will be specified by DCH in detail. Follow only the DCH specification.
- Erroneous publication of a five year plan can lead to major commitment or donor confusion.
- DCH will officially publish the regulations and rules. Nothing will supersede that.
- With this much money in a program, there will be a lots of helpers coming to the table to take money from the program as fees or otherwise
- With this being a three year program, helpers will look to tie your hospital into a three year program of maintenance to them. Avoid this at all costs.
- Seek clear understating from HomeTown and or Draffin Tucker and or Morris Manning before adopting any program.
- At the right time make sure that Hospital Boards are fully educated on what they are getting into
- With incorrect or incomplete information, donors can get very confused. Don’t confuse them at the start because it will take much time and effort to reduce confusion after the fact.
3)Action required currently:
- Read the bill and understand it as written
- Then do nothing pending the DCH publication of rules by which the program will be administered
- Prepare question when the DCH publication occurs. That DCH publication date for the rules and regulations has not been set.