Tuesday, June 30, 2015

Who decides on non-profit status?

Here's a question for the lawyers out there.

A state court judge in New Jersey has determined that a local hospital is not really a non-profit and therefore should not have a property tax exemption.

Does the existence of a federal IRS ruling that the hospital is non-profit serve to insulate the hospital from a state judge's determination?  In other words, does the Constitutional supremacy clause hold in this kind of matter? Can the hospital win on appeal based on this logic?

In short, can the state find in one way for state jurisdictional taxes, based on its own logic, while the Feds find another way for federal jurisdictional taxes, based on theirs?


Brad F said...

In response to your last question:
Can you root for your favorite team's defensive squad, but the visiting team's offensive one?

Asking for a friend.
Brad :)

Robert Best said...

As one of the "lawyers out there," I think there's a perfectly good argument for consistency between state and federal determinations of non-profit status, however, I don't think that's where the issue will land. Except for churches and religious organizations, I can't think of a constitutional dimension to having a right to non-profit or tax-exempt treatment. Without that religious element, the favorable tax treatment given to charities is doled out by the taxing authority. If they have the discretion to give the exemption, they can also decide not to do so.

It's a shame in health care. The cost is high enough as it is. Taxing it can't help.

Anonymous said...

I sent a message about asking why we can't fill the gaps with these corporations that do little for the community and have no basis for the exemption to the Congress persons. Of course they did nothing.