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Non Profit Organizations And The IRS

Not for profit organizations have federal and state tax concerns. The IRS has traditionally acted as the “gate-keeper.” If the organization was exempt from tax by the IRS the states typically followed the federal decision. Now, state governments, anxious to collect income and sales taxes, and municipalities trying to squeeze real estate taxes from non-profits, are ignoring Federal Nonprofit status.

In a long-standing battle, the Illinois Supreme Court on March 18, 2010 ruled that a Catholic hospital was not “charitable enough,” so it took away the hospital’s tax-exempt status. The purpose was to force the hospital to pay millions of dollars in real estate taxes. The Court, ignoring the purpose of the hospital and the high number of Medicare and Medicaid patients, as well as uninsured patients who simply cannot pay, both of which cause significant loses, focused on the hospital providing 1% of its care for free. The Provena Medical case is a good example of the over-reaching of State and Local Governments.

Find out more by contacting Ronald J. Cappuccio, J.D., LL.M. (Tax) at 856-665-2121. You can also contact us by email.