Knowledge Center

Monday, November 11, 2013

"New Legislation Seeks to Clarify Property Tax Exemption for Nonprofit Health Care Institutions"


In 2010, in Provena Covenant Medical Center v. Department of Revenue, 1 the Illinois Supreme Court held that a hospital was not entitled to a charitable-use exemption from property tax when the hospital, which operated primarily for profit, failed to provide evidence of charitable expenditures or of more than a minimal amount of free or discounted care. In response, the Illinois legislature passed, and the governor signed, two relevant pieces of legislation (S.B. 2194, 6/14/12, Public Act 97-688; and S.B. 3261, 6/14/12, Public Act 97-690) that established new standards for the hospital property tax exemption and increased the requirements for hospitals to provide charity care to uninsured persons for medically necessary treatment. The following discussion reviews the Illinois Supreme Court's decision in Provena and the legislative response, and examines the rationale behind both.

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This article appears in and is reproduced with the permission of the Journal of Multistate Taxation and Incentives, Vol. 23, No. 6, September 2013. Published by Warren, Gorham & Lamont, an imprint of Thomson Reuters. Copyright (c) 2013 Thomson Reuters/Tax & Accounting. All rights reserved.

JORDAN M. GOODMAN is a partner with the law firm of Horwood Marcus & Berk Chartered, in Chicago, Illinois, where he co-chairs the firm's state and local tax practice. He plans for and resolves state and local tax controversies for multistate and multinational corporations, and has successfully resolved state tax controversies in virtually every state. He lectures and writes frequently on numerous state and local tax topics, is a member of The Journal's editorial advisory board (and a frequent contributor), and also is a Certified Public Accountant. He thanks Nick Kamenjarin, a summer associate with the firm, for his substantial assistance with this article.

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