Not-for-profit hospitals and nursing homes began formulating a battle plan Friday against what they call the most "stringent" charitable property tax-exempt standards in the nation.
The proposed guidelines, developed and released by the State Tax Commission, say that non-profit hospitals must prove their contributions to the community exceed their annual property tax liability to qualify for tax-exempt status.Tax Commissioner Roger Tew said the standards, which affect about $8 million in pending property taxes, were developed as guidelines to local boards of equalization. It's their responsibility to determine whether non-profit hospitals and nursing homes are charitable entities and therefore property tax-exempt.
A public hearing on the new guidelines is scheduled for Sept. 7 at 9 a.m.
But Intermountain Health Care, which owns and operates the majority of the hospitals affected by the guidelines, expressed disapproval of the proposed standards Friday.
"The standards are tough, demanding, and more stringent than those in any other jurisdiction in the nation," Steven D. Kohlert, IHC senior vice president, said in a prepared release. "Certainly they go significantly beyond the suggestions made to the Tax Commission last year by Utah's nonprofit hospitals and nursing homes."
As in years past, IHC is expected to wage a major campaign against taxation - which officials contend will reduce the hospitals' ability to provide charity care to Utah communities.
"Certainly we are going to demonstrate how our hospitals meet the standards for tax exemption. We believe our hospitals provide a significant community benefit that should entitle them to exemption," said Douglas J. Hammer, IHC vice president and general counsel.
In preparing the guidelines, the Tax Commission spent two years gathering information from counties, for-profit and not-for-profit hospitals.
Tew said the standards do not reflect "a political decision" - a bias toward one side of the issue or the other.
"That is, the Tax Commission is making no effort to arrive at compromises between competing interests, nor is the commission attempting to promote its view as to what the law should be," Tew said. "The commission fully expects the Utah Supreme Court will have the opportunity to review the final standards."
Until five years ago, not-for-profit hospitals were automatically granted tax-exempt status simply because of their non-profit status. That status ended with a ruling by the Utah Supreme Court, which determined that not-for-profit hospitals must to pass a new six-point test to prove their worthiness for tax exemption.
Voters rejected a proposal in 1986 that would have added specific language to the Utah Constitution making non-profit hospitals and nursing homes automatically tax-exempt. Because of that decision, hospitals since have been obligated to defend their tax-exempt status yearly.