The Chicago Sun-Times continually performs a public service by exposing public corruption in Chicago and Illinois. As our former governor, Blago, has gone national, most people around the country know that there is plenty of corruption to keep the Sun-Times busy.
Over the last several days, the Sun-Times has run a series on our water utility and who pays what for their water. The series has...
The Illinois Supreme Court ruled today that Provena Hospital did not provide sufficient charity care to qualify for a property tax exemption. This widely watched case is likely to send shock waves through nonprofit hospitals through out the country. Cash strapped state and local governments are likely to be...
Happy New Year, nonprofit world. Those greetings come both us and tax officials. We will be writing about you in the New Year. The taxing authorities will be looking to tax you, if the end of the last decade is any indication of what is to come.
Let’s begin with begin by looking at what is happening federally. We have our eye on the proposed...
Yesterday the Illinois Supreme Court heard 55 minutes of oral arguments in the Provena Covenant Hospital property-tax exemption case. The Illinois Attorney General is contesting the claimed exemption, arguing that Provena did not provide adequate charity care.
Bruce Japsen of the Chicago Tribune is reporting that the AG argued that providing charity care to 302 people at a cost in revenue that amounted to just .7% of the Provena’s total revenues does not amount is an insufficient level of charity care for purposes of qualification for property tax exemption. Illinois Supreme Court: Provena Covenant Medical Center, Illinois Department of Revenue Square Off Over Tax-Exempt Status. Not surprisingly, Provena’s counsel pointed out that charity care is not the only benefit Provena provides to the community.
A decision by the court is not imminent. Whether the decision will be handed down in a matter of weeks or months is unknown. What is of note is that two of the seven justices recused themselves. This may stack the deck in the AG’s favor. Under the court’s rules, four of the five justices must vote to overturn the lower court’s decision in favor of the AG. Otherwise the lower court’s decision denying property tax exemption stands.
Internal Revenue Service - Circular 230 Disclosure: As provided for in Treasury regulations, any advice (but none is intended) relating to federal taxes that is contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.
THE FOREGOING IS NOT AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. IF LEGAL ADVICE IS REQUIRED, THE NONPROFIT OR OTHER PARTY IN QUESTION SHOULD SEEK THE ADVICE OF QUALIFIED LEGAL COUNSEL.
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Everyone knows that in these tough economic times state and local governments are struggling to balance their budgets. Many governors, legislators, and mayors look hungrily at the property occupied by nonprofit hospitals, educational institutions, cultural institutions, and large social service agencies. Although these institutions and their stakeholders generate employment, sales taxes, and important services, our elective representatives see lost property tax revenue when they gaze upon green college campuses and the concrete fortresses housing large urban hospital systems.
As this is written, the American Hospital Association is in the back of an ambulance, rushing to the nearest hospital emergency room with severe chest pains. This assumes the AHA found today's Wall Street Journal outside its door. Splashed across the paper's front page is a major expose by John Carreyrou and Barbara Martinez entitled, "Nonprofit Hospitals, Once For the Poor, Strike it Rich." While the AHA is being transported by ambulance, Senator...
You will be hard pressed to find a definition for charity in the Internal Revenue Code. Most efforts to define charity are vague or circular. In the past, vagueness has worked to the advantage of those seeking classification and subsidy as charities. But vagueness can cut both ways. The recent experience of the MacDowell Colony is a perfect example. This was a case involving state property tax exemption.
As taxes become harder to raise and demands for governmental services go...
We noticed that Harvard University announced on Monday a plan to make more financial aid available to middle-class and upper-middle class students. Jane J. Kim, Harvard Trims Tuition Bills for Families, Wall Street Journal, Dec. 11, 2007. For these students, tuition will equal 10% of the family's household income. As a consequence, a family making $120,000 a year would pay $12,000 per year in tuition, compared to $19,000 in tuition under the existing policy. Harvard also plans to do away with the loan portion of its financial package, substituting a grant instead. As per the existing policy, those with under $60,000 of family income pay no tution, with those with slightly higher family incomes required to pay a relatively small percentage of the sticker price.
None of this should come as a surprise, with the federal government and Harvard critics eyeing Harvard's...
Living in the City of Chicago gives one a fairly good perspective on what pressures state and local officials believe they are facing these days. Mayor Daley is looking for new sources of revenue to finance city government. His answer is taxes on bottled water and a city-owned casino (one can only begin to imagine the corruption and patronage that would come with that). Meanwhile Cook County Board President Todd Stroger is proposing sales tax increases, doubling parking fees, and doubling the county's take from gas taxes to finance a crumbling and corrupt county government. Moving up the food chain, the state legislature and Illinois Governor Rod Blagojevich have been locked in a...
Today, Rich Lord of the Pittsburgh-Gazette a continued his series on the City of Pittsburgh's efforts to obtain voluntary payments for city services from nonprofits. In the trade, these payments are known as PILOTS, or Payments in Lieu of Taxes. Nonprofits provide benefits to major cities, but they also can pose a drain on the tax base by taking property off the tax rolls. According to Lord, one-third of Pittsburgh's property value is exempt, divided evenly between property owned by the government and property owned by nonprofits. See, Rich Lord, Pittsburgh's Pleading for Nonprofit Money Called 'Unique': Most Cities have Formulas for Payments in Lieu of Taxes Payments, Feb. 26, 2007.
Some cities enter into voluntary, but enforceable contracts with exempt entities such as...
