Transcript Charitable Hospital Exemptions William A. Rodda, CAE, RES Forsyth County Tax Assessor/Collector G.S.

Charitable Hospital
Exemptions
William A. Rodda, CAE, RES
Forsyth County Tax Assessor/Collector
G.S. 105-278.8 (Machinery Act)
• Real & personal property held for or
owned by a hospital organized and
operated as a nonstock, nonprofit,
charitable institution shall be exempted
from taxation if actually and exclusively
used for charitable hospital purposes.
G.S. 105-278.8 (Machinery Act)
• If part of a property that otherwise meets
the above requirements is used for a
purpose that would require exemption if
the entire property were so used, the
valuation of the part so used shall be
exempted from taxation.
G.S. 105-278.8
• A charitable hospital purpose is a hospital
purpose that has humane and
philanthropic objectives; it is a hospital
activity that benefits humanity or a
significant rather than limited segment of
the community without expectation of
pecuniary profit or reward.
G.S. 105-278.8
• The fact that a qualifying hospital
charges patients who are able to pay for
services rendered does not defeat the
exemption.
Case Notes
• An applicant will not be rejected simply
because it charges patients who are able
to pay for their services. (In re
Foundation Health Systems, 1989).
Case Notes
• What is a Hospital? “…an institution for
the reception and care of sick, wounded,
infirm, or aged persons…” (In re
Foundation Health Systems, 1989).
Case Notes
• Nonprofit outpatient surgical center with
operating rooms designed to render
hospital services was a “hospital” (In re
Foundation Health Systems, 1989).
Case Notes
• Hospital day care center which assists in
the recruitment and retention of hospital
employees is entitled to exemption (In re
Moses Cone Memorial Hospital, 1995).
G.S. 131A-21 (Medical Commission)
• If bonds or notes are issued by the
Commission to provide or improve a
health care facility, then until the bonds or
notes are retired, the facility for which
bonds or notes are issued is exempt from
property taxes to the extent provided in
this section.
G.S. 131A-21 (Medical Commission)
• Property may be exempt from property
taxes as provided in this section if a
timely application for the exemption is
filed with the assessor of the county in
which the property is located as required
under G.S. 105-282.1.
G.S. 131A-21
• The property tax exemption under this
section shall not exceed the lesser of the
original principal amount of the bonds or
notes or the assessed value for ad
valorem tax purposes of the facility.
G.S. 131A-21
• If bonds or notes are issued to finance
more than one health care facility, only
that portion of the principal amount of the
bonds or notes used to provide or
improve the particular facility, including
any allocable reserves and financing
costs, may be considered for the purpose
of determining the amount of the
exemption allowable under this section.
G.S. 131A-21
• The exemption authorized by this section
shall begin with the first full tax year of
the taxpayer following the issuance of the
bonds and notes. This section does not
affect a health care facility's eligibility for
a property tax exemption under
Subchapter II of Chapter 105 of the
General Statutes.
G.S. 105-282.1
• Application – Every owner of property
claiming exemption or exclusion from
property taxes under the provisions of
this Subchapter has the burden of
establishing that the property is entitled
to it.
G.S. 105-282.1
• Annual Review of Exempted or Excluded
Property. – Pursuant to G.S. 105-296(l),
the assessor must annually review at
least one-eighth of the parcels in the
county exempted or excluded from
taxation to verify that the parcels qualify
for the exemption or exclusion.
Tips
• Who is the owner of the property?
– Owned by a nonstock, nonprofit
charitable hospital
– Exemption by IRS under Section 501(c)(3)
is not the sole determining factor!
• What do they do?
– “…an institution for the reception and care
of sick, wounded, infirm, or aged
persons…”
Tips
• What do they do?
– Is there an emergency room?
– Do they perform actual surgical
procedures?
– Do they treat “sick, wounded, infirm or
aged” people?
– Leasing space or treating patients?
Tips
• Does the facility have a charity
care policy?
– Self executing?
– Application required? Other
obstacles?
• Does the facility truly accept
anyone without regard to their
ability to pay?
Tips
• Are the prices charged for the
uninsured patient the same as
charges for insurance plans,
Medicare and Medicaid?
• Does the facility accept Medicare
and Medicaid?
Tips
• What was the amount of actual
charity care provided by the
facility?
– What is “charity care”?
“Charity Care” according to IRS
“free or discounted health services
provided to persons who meet the
organization’s criteria for financial
assistance and are thereby
deemed unable to pay for all or a
portion of the services”
“Charity Care” according to IRS
• Does not include:
– Bad debt
– Difference between the cost of
Medicaid and Medicare and the
revenue derived therefrom
– Contractual adjustments with thirdparty payers
Tips
• Many of these question will be
answered by the IRS form 990 and
accompanying Schedule H.
– Schedule H is required effective in
2009.
• www.guidestar.org
Wake Forest University Baptist
Medical Center
Wake Forest University Baptist
Medical Center
Forsyth Memorial Hospital
Medical Park Hospital
Downtown Health Plaza
Hawthorne Surgical Center
Salem Family Practice
Aegis
Piedmont Plaza
Hawthorne Inn
Policy Considerations
• Should a clear, concise definition for
“charitable hospital” and “charitable
hospital purpose” be developed?
• Should a minimum level of charity care
(5 to 10% of revenues) be required for
exemption?
Policy Considerations
• Should local hospitals assist in covering
the costs of local ambulance services,
police and fire protection?
• Should the “medical commission bond”
exemption be repealed?
Charitable Hospital
Exemptions
William A. Rodda, CAE, RES
Forsyth County Tax Assessor/Collector