TAX-EXEMPT STATUS OF CERTAIN HOSPITAL SERVICE ORGANIZATIONS.

SEC. 109. TAX-EXEMPT STATUS OF CERTAIN HOSPITAL SERVICE ORGANIZATIONS. (a) Exemption From Tax.— Section 501 (relating to exemption from tax on corporations, etc.) is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Cooperative Hospital Service Organizations.— For purposes of this title, an organization shall be treated as an organization organized and operated exclusively for charitable purposes, if— “(1) such organzation is organized and operated solely— “(A) to perform, on a centralized basis, one or more of the following services which, if performed on its own behalf by a hospital which is an organization described in subsection (c)(3) and exempt from taxation under subsection (a), would constitute activities in exercising or performing the purpose or function constituting the basis for its exemption: data processing, purchasing, warehousing, billing and collection, food, industrial engineering, laboratory, printing, communications, record center, and personnel (including selection, testing, training, and education of personnel) services; and “(B) to perform such services solely for two or more hospitals each of which is— “(i) an organization described in subsection (c)(3) which is exempt from taxation under subsection (a), “(ii) a constituent part of an organization described in subsection (c)(3) which is exempt from taxation under subsection (a) and which, if organized and operated as a separate entity, would constitute an organization described in subsection (c)(3), or “(iii) owned and operated by the United States, a State, the District of Columbia, or a possession of the United States, or a political subdivision or an agency or instrumentality of any of the foregoing; “(2) such organization is organized and operated on a cooperative basis and allocates or pays, within 8½ months after the close of its taxable year, all net earnings to patrons on the basis of services performed for them; and 82 Stat. 270 “(3) if such organization has capital stock, all of such stock outstanding is owned by its patrons. For purposes of this title, any organization which, by reason of the preceding sentence, is an organization described in subsection (c)(3) and exempt from taxation under subsection (a), shall be treated as a hospital mid as an organization referred to in section 503(b)(5).” (b) Effective Date.— The amendments made by subsection (a) shall apply to taxable years ending after the date of the enactment of this Act.