Assignment: Utah State Taxation

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Assignment: Utah State Taxation

Assignment: Utah State Taxation

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Under this court’s rationale, the amount of community benefit provided by the not-for-profit hospital should equal or exceed the amount of the tax exemp- tion. In this case, community benefit did not equal the tax exemption, and the court required the not-for-profit hospitals to pay the difference in taxes.

Critics of this decision have argued that the community benefit standard is too lenient. The standard defined community benefit as indigent care, community education and service, medical discounts, and donations of time, money, or services made by hospital employees acting as private individuals (Utah State Tax Commission 1990). In 2001, in Salt Lake County, the Board of Equalization voted to maintain tax exemption for four Intermountain Health Care facilities, but not before it required the system to once again present its case for exemption (Bellandi 2001).

◆ A case in Boise, Idaho, stated that a not-for-profit hospital was not sufficiently supported by donations; donations accounted for less than 2 percent of the hospital’s total revenues. (Dutton 2013).

◆ A hospital in Pennsylvania lost its tax-exempt status because the courts felt it had a profit motive, as evidenced by the CEO’s $400,000 salary (in 1994), the fact that surpluses were sent to the corporate parent, and the fact that the hospital forced physicians to sign noncompete agreements (Thompson Powers LLC 1999).

◆ A hospital in New Hampshire had its tax-exempt status revoked because its collection policy stipulated that it receive full payment for all services whenever possible; it provided only 2.9 percent of total revenue in charity care; and it used its surpluses to fund a for-profit subsidiary (Taylor 2001).

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I n t r o d u c t i o n ➤ t o ➤ t h e ➤ F i n a n c i a l ➤ M a n a g e m e n t ➤ o f ➤ H e a l t h c a r e ➤ O r g a n i z a t i o n s8 2

◆ The attorney general of Connecticut sued a hospital for hoarding $37 million in charitable funds in order to generate interest income instead of spending the funds to provide indigent care (Piotrowski 2003b).

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