Supreme Court Affirms Constitutional Test Must be Met by Those Seeking Charitable Exemptions

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In a 4-3 decision, the Pennsylvania Supreme Court, in Mesivtah Eitz Chaim of Bobov, Inc. v. Pike County Board of Assessment Appeals, No. 16 MAP 2011 (April 25, 2012) (“Mesivtah”), held that a property owner seeking an exemption from real property taxation as a “purely public charity,” must first meet the five-prong test set forth in Hospital Utilization Project v. Common-wealth, 487 A.2d 1306 (Pa. 1985) (the “HUP Test”). As explained below, this decision does not alter substantive exemption law, although it may encourage some taxing jurisdictions to take harder looks at exemptions. Those entities with exemptions should be aware of the Mesivtah decision and its limited holding.

In Mesivtah, the Commonwealth Court had held that the Appellant (a not-for-profit religious summer camp), did not relieve the government of some of its burden and, therefore, failed one of the prongs of the HUP Test, the test used to determine whether an institution qualifies as a purely public charity under the Pennsylvania Constitution.

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