The IRS has issued frequently asked questions about taxation of provider relief payments.
According to the IRS FAQs, “a payment to a business, even if the business is a sole proprietorship, does not qualify as a qualified disaster relief payment under section 139. The payment from the Provider Relief Fund is includible in gross income under section 61 of the Code.”
Additionally, “a health care provider that is described in section 501(c) of the Code generally is exempt from federal income taxation under section 501(a). Nonetheless, a payment received by a tax-exempt health care provider from the Provider Relief Fund may be subject to tax under section 511 if the payment reimburses the provider for expenses or lost revenue attributable to an unrelated trade or business as defined in section 513,” according to the IRS FAQs.
On March 27, 2020 “the Coronavirus Aid Relief and Economic Security Act (CARES Act) appropriated $100 billion for the Public Health and Social Services Emergency Fund (Provider Relief Fund),” according to the IRS FAQs.
The IRS FAQs also state that “the Paycheck Protection Program and Health Care Enhancement Act appropriated an additional $75 billion to the Provider Relief Fund,” on April 24, 2020.
For more information on the IRS’ FAQs about the taxation of provider relief payments, visit: