What is Charity Care - Qualifying for Property Tax Exemptions


This article discusses the two decisions from the Illinois Department of Revenue (IDOR) concerning the property tax exemption applications were filed by two health care applicants:

Community Health Care, a non-profit, community-based primary care clinic in Rock Island, and Provena Covenant Medical Center (Provena Covenant), a general acute care, nonprofit hospital located in Urbana.

In both cases, the IDOR applied high standards to qualify as "charity”, and the IDOR denied the property tax exemptions.

The article summarizes the Second District Illinois Appellate Court decision in Community Health Care and the IDOR Director’s Decision issuing its final administrative decision in Provena. Ultimately, in 2010, the denial of the property tax exemption to Provena was affirmed by the Illinois Supreme Court in a plurality opinion.

The article details how the IDOR has set out and applied high standards in Community Health Care and in Provena Covenant in order to qualify as "charity care." It concludes that in light of these cases, all charitable organizations should review their charity care policies.

It discusses the significance of these charitable exemption cases to pending exemption applications and currently exempt property owners based on charity, with specific focus on not-for-profit hospitals and clinics.

On the charity standards, the article discusses charitable purpose - percentage vs. purpose test, the rationale for hospital property tax exemptions, property tax exemptions under Sisters of Third Order (and the IDOR rationale for distinguishing Sisters of Third Order), and other grounds for property tax exemptions on hospitals.

The issue of the proper standard to apply in determining qualification for charitable property tax exemptions continues to be the subject of further litigation to this day.

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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.

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