After Years of Judicial and Legislative Uncertainty Hospitals Receive Their Own Property Tax Exemption Under New Law

by Franczek Radelet P.C.
Contact

http://www.franczek.com/frontcenter-Property_Tax_Exemptions_Illinois_hospitals.html

[authors: Scott Metcalf and Ares Dalianis]

For the past eight years we have been reporting to you on the controversy surrounding the determination of property tax exemptions for Illinois not-for-profit hospitals. The issue reached the Illinois Supreme Court in April 2010. At that time we reported on the Court’s decision in Provena Covenant Medical Center v. Dept. of Revenue, which upheld the revocation of a charitable property tax exemption because the hospital in question did not prove a sufficient level of charitable medical care was being provided. Most recently, in March of this year we reported on the Governor lifting a moratorium on hospital property tax exemption decisions. The controversy revolved around how to measure the amount of charitable care provided by hospitals. Last month, the Governor signed P.A. 97-688 into law, resolving this issue and creating a new type of property tax exemption specifically designed for hospitals. The new law represents a compromise among the various interest groups involved in this issue for almost a decade.

P.A. 97-688 adds a new section to the Property Tax Code dealing specifically with property tax exemptions for hospitals. Prior to the addition of this section, hospitals were only eligible for exemptions if they could demonstrate that they were “institutions of public charity.” The new Section 15-86 of the Property Tax Code provides a bright line calculation to determine eligibility for the exemption. Essentially, if the total value of a hospital’s charitable services or activities meets or exceeds the hospital’s estimated property tax liability, the hospital may claim the exemption.

The statute identifies seven types of hospital services and activities that constitute charitable activities. These include:

  • Free and discounted hospital care for the indigent;
  • Financial or other support of health care programs or services for the indigent;
  • Subsidizing physicians treating low-income persons;
  • Disease management and prevention for low-income persons in the community;
  • Financial support of government programs providing health care for low-income persons, such as Medicaid;
  • Financial or in-kind subsidies to state or local government health care programs; or
  • Any other activity provided by the hospital that the Department of Revenue determines relieves the burden of government or addresses the health of low-income or underserved individuals.

The statute then specifies how to estimate a hospital’s property tax liability. A hospital will calculate its estimated property tax liability by multiplying the lesser of the actual assessed value placed upon the property by a local assessing official or the estimated assessed value of the exempt portion as determined by the hospital, by the state equalization rate and the applicable tax rate. In order to maintain a property tax exemption, the property owner must file an affidavit with the chief county assessment officer, on or before January 31 of each year, accompanied by an exhibit showing (1) the value of its qualifying charitable services or activities and (2) the value of its estimated property tax liability.

The Illinois Department of Revenue is working on how the new law will be implemented. For new exemption filings the Department will be creating a form and rules for applicants to follow in order that they submit the necessary information to the Department. The Department expects to have to have the forms available by Labor Day. For applications that are currently pending, which includes some of the largest hospital properties in the State, it is likely that the Department will be reviewing the existing filings to see if there is sufficient information in the application to evaluate the request under the new law. If the pending applications have sufficient data the Department will likely be deciding them with the information already provided rather than asking the hospitals to submit new information with the anticipated new form.

Informed sources believe that 90% of all not-for-profit hospitals will qualify for exempt status under the new law and that the remaining 10% will need a few years to arrange their finances to qualify. Should pending applications of hospitals currently paying property taxes be granted, refunds will issue for those properties where the taxes have been paid. Given the size and value of some of the new hospital construction throughout the State, the refund issuances may be significant. Going forward, however, the new law at a minimum provides certainty in this area of the law.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Franczek Radelet P.C. | Attorney Advertising

Written by:

Franczek Radelet P.C.
Contact
more
less

Franczek Radelet P.C. on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!