Property Tax Exemption Bill - Illinois Hospitals

Illinois General Assembly Passed New Hospital Property Tax Exemption


SB 2194, the “Medicaid reform” bill, has passed both houses of the General Assembly on May 29, 2012. Included in a 182 page bill was the charity care legislation that will allow hospitals to apply a much broader definition for what qualifies as charity care.

Effective immediately, the legislation sets a clear formula for how much free care and services hospitals must provide to qualify for tax breaks.

It seeks to end 10 years of disputes between the Illinois Department of Revenue and not-for-profit hospitals and clinics.

This started when for the Tax Year 2002, the IDOR denied an property tax exemption to Provena Covenant Medical Center, a general acute care hospital in Urbana, Illinois.

In that case, Provena had been exempt from property taxes previously, and need to re-file for a property tax exemption due to an ownership change relating from merger of Catholic hospitals. The IDOR found that Provena was not a charitable organization and that the property was not primarily used for charitable purposes.

The IDOR decision narrowly focused on the dollar value of the charitable activities cost and found that those financial figures fell far short of meeting the primary purpose standard. The Supreme Court upheld the denial, but the IDOR approach was supported by a plurarity of 3 justices.

Below I am attaching just the property tax provisions, creating a new Section 15-86, “Exemptions related to access to hospital and health care services by low-income and underserved individuals” (35 ILCS 200/15-86).

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Reference Info:State, 7th Circuit, Illinois | United States

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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