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Illinois Reconsiders Property Tax Exemptions for Hospitals

September 23rd

As the US economy continues to struggle, state and local deficits are continuing to rise. Most notably, the state of Illinois is currently facing a budget deficit in excess of $11 billion. In an effort to combat the rising debt, Illinois has, in recent weeks, begun a series of discussions challenging the property tax exemptions granted to some of its hospitals.

Citing an insufficient amount of charity care as the reason, the state of Illinois has actually gone so far as to strip property tax exemptions from a number of well-known hospitals, including the Prentice Women’s Hospital in Chicago. Edward Hospital, a growing medical center in Naperville, and Decatur Memorial Hospital in central Illinois have also recently lost their tax-exempt status.

All of the hospitals in question supposedly only provided between 0.96 percent and 1.85 percent free or discounted medical care. The state therefore claimed that the hospitals had been operating as “for profit” businesses when the Illinois State Constitution clearly states that only nonprofits may qualify for tax exemptions.

Future Plans to Gather Unpaid Taxes

In an effort to gather more unpaid taxes from potentially dubious nonprofit organizations, the state of Illinois is planning a broader examination of charity care provision by tax-exempt entities. If successful with the three hospitals already facing exemption revocation, Illinois is expected to begin a search for other nonprofit hospitals with low percentages of charity care.

At present, the state has announced that it is already reviewing entities owned by 15 separate hospital systems. Despite moves by the Illinois Hospital Association to combat this state action, previous court rulings have upheld such disciplinary action against nonprofit organizations.


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