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Tuesday, April 23, 2013

Pennsylvania Law Would Let State Decide Nonprofits' Tax-Exempt Status

A proposed law in Pennsylvania would fundamentally change how nonprofits receive tax-exempt status, shifting the process from the judicial system to the state Legislature.

HB 724/SB4 passed the state Senate in a 30-20 vote last month and also received approval from the House Finance Committee. Since the bill would amend Pennsylvania's constitution, it must pass both houses in consecutive legislative sessions before going to voters for final approval.

The proposed law has generated enormous controversy in the state, according to an article in The Pittsburgh Post-Gazette. While supporters say it would provide consistency in what defines a tax-exempt charity, detractors, including Pittsburgh Councilwoman Natalia Rudiak, believe it's an effort by large organizations to shift decision-making away from communities which are increasingly trying to get nonprofits to contribute more.

Rudiak told The Gazette that she is also concerned that there is not a single public hearing to discuss the proposed change.

Those supporting the bill include large nonprofit hospitals and universities such as the Hospital & Healthsystem Association of Pennsylvania, and the Association of Independent Colleges and Universities of Pennsylvania. In a Jan. 28 memo to his colleagues, Republican Sens. Mike Brubaker and Joe Scarnati said the legislation became necessary once the Pennsylvania Supreme Court denied tax-exempt status to a camp in Pike County because it didn't provide relief to the local government as mandated by a 1985 court decision.

"By elevating its own judgment above the will of the General Assembly, the Court has created uncertainty as to the qualifications for public charities in Pennsylvania," the senators wrote.

You can read the full story in The Pittsburgh Post-Gazette.

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