Monday, January 4, 2016

NJ Bill Would Maintain Property Tax Exemption of Nonprofit Hospitals

The Philadelphia Inquirer reports that a bill passed by the Budget Committee of the New Jersey Senate and referred to the State and Local Government Committee of the New Jersey General Assembly would maintain property tax exemption for New Jersey nonprofit hospitals – for a price.  Says the story:

The bill comes in response to a June tax court ruling that found that Morristown Medical Center in Morris County failed to qualify for the exemption from tax years 2006 to 2008.

The court found that the nonprofit hospital "operated and used its property for a profit-making purpose," violating a legal standard used to determine whether it owed property taxes.

For example, in addition to employing its own physicians, Morristown Medical Center contracted with for-profit doctors that used the hospital's facilities and who directly charged patients. The court said it was impossible to delineate between the hospital's nonprofit and for-profit operations.

The property tax exemption for nonprofit hospitals granted by the bill reportedly would extend to hospitals with on-site for-profit medical providers.  But there is a catch.  According to the Inquirer, the bill would also generally require hospitals to pay an annual community service fee to local governments:

[Nonprofit hospitals would] also pay an annual community fee, most of which would go to municipalities and 5 percent to counties. Acute care hospitals would pay $2.50 per day for each licensed bed, while satellite emergency care facilities would pay $250 per day.

The fees could generate up to $21 million for municipalities and counties by one estimate.  The bill is reported to limit the use of this revenue for “public safety or to reduce municipal and county property taxes.”

JRB

https://lawprofessors.typepad.com/nonprofit/2016/01/nj-bill-would-maintain-property-tax-exemption-of-nonprofit-hospitals.html

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