Court Takes Careful Look At “Non-Profit Hospital” And Denies Property Tax Exemption

Posted by Jeffrey Siegel on July 7, 2015

Court Denies ‘Non-profit’ Hospital Property Tax Exemption

(From Accounting Today)

The New Jersey Tax Court denied Morristown Medical Center a property tax exemption because it did not operate like a non-profit.  The case was one of first impression in the New Jersey Tax Court, in which the case at issue was the property tax issue rather than the hospital’s tax-exempt status.  The court considered testimony from a number of witnesses, but concluded that the hospital’s operations violated the profit test.

In a statement sure to be scrutinized by the rest of New Jersey’s nonprofit hospitals, Judge Bianco wrote in his June 25.   “If it is true that all non-profit hospitals operate like the Hospital in this case, as was the testimony here, then for purposes of the property tax exemption, modern non-profit hospitals are essentially legal fictions, and it is long established that ‘fictions arise from the law, and not law from fictions.’ Accordingly, if the property tax exemption for modern non-profit hospitals is to exist at all in New Jersey going forward, then it is a function of the Legislature and not the courts to promulgate what the terms and conditions will be. Clearly, the operation and function of modern non-profit hospitals do not meet the current criteria for property tax exemption under [the applicable statute] and the applicable case law.”

If you or your clients have tax problems, call Jeffrey R. Siegel, your Kansas City Tax Attorney, at (913) 735-4829.