Friday, March 2, 2012

Illinois To Continue Reviewing Nonprofit Hospital Tax Exemptions

The deadline for a new proposal for dealing with Illinois nonprofit hospitals' tax exemptions has come and gone, and no solution was reached.  That led to a decision that will not please the hospitals.

The Chicago Tribune reported yesterday that Illinois Gov. Pat Quinn lifted a moratorium on the state's review of property tax exemptions requested by nonprofit hospitals.  Two proposals emerged Tuesday, but it seems like talks didn't go anywhere with the hospitals.  The state's Department of Revenue currently has as many as 18 pending applications from nonprofit hospitals requesting tax exemption.

The Illinois Hospital Association, along with other groups, argue that the current definition of what constitutes charitable care is far too narrow.  They argue that hospitals aren't given enough credit for providing other community benefits, such as donations to charitable community healthcare organizations.  The state's constitution, however, says that tax exemptions are only allowed for property that is used "exclusively for charitable purposes."

This rule was rarely enforced until 2004, when Illinois revoked Provena Covenant Medical Center's tax exempt status because its charitable care was deemed insufficient.  The hospital appealed the ruling and it eventually ended up in the Illinois Supreme Court, which ruled the state was justified in its initial ruling.

Talks between the hospitals and the state will continue next week in hopes of striking a deal.  You can read the full story in The Chicago Tribune.

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