Non-Profit Property Tax Exemption

What’s new?

  • On September 20, 2018 the Illinois Supreme Court unanimously upheld the constitutionality of the state’s hospital property tax exemption law.
  • The ruling, Oswald v. Beard, 2018 IL 122203 (9-20-18), caps many years of effort to enact and then defend a clear and fair test for property tax exemption for non-profit hospitals.
  • The original lawsuit was filed in 2012, just months after the state enacted a new hospital property tax exemption Public Act 97-688 that established clear and fair standards for non-profit hospitals and health systems.
  • The Illinois Health and Hospital Association (IHA) was a party in the Oswald case and worked with Illinois Department of Revenue and the Illinois Attorney General’s Office in defending the constitutionality of the statute.  For a complete legal history, please reference IHA’s summary here.

What’s the issue?

  • As a non-profit organization, AMITA Health currently is exempt from paying local property taxes.
  • Illinois uses the property tax exemption to encourage and enable non-profit organizations to spend and invest more on giving back to their communities, and in recognition that non-profit organizations are providing a public service.
  • Non-profit healthcare organizations benefitting from the exemption have to report to the Illinois Attorney General every year the dollar amount of community benefit they provide in order to continue to be designated as a non-profit organization.
  • If the total community benefit reported is greater than what a non-profit would have had to pay in property taxes, then the non-profit will be exempt from paying property taxes for that year.
  • If total community benefit reported is less than what a non-profit would have had to pay in property taxes, local jurisdictions may request the organization begin paying the property taxes they are owed.
  • A Cook County taxpayer brought a case arguing that the law was unconstitutional, because it did not explicitly require the activities of the non-profit be “exclusively for charitable purposes” as required in the Illinois constitution for tax exemption.  The law was thrown out by a lower court and the court case was then heard by the Supreme Court.

Why does it matter?

  • The property tax exemption specifically allows AMITA Health to provide greater amounts of community health benefit across the system through caring for patients who cannot pay, and supporting initiatives and organizations working to make our communities healthier.
  • AMITA Health provided over $213 million in community benefit in 2017. The additional amount that AMITA Health would have to pay in taxes if the law is overturned is estimated to be between $30 and $50 million per year.
  • If would be extremely difficult for AMITA Health to absorb the larger tax burden and continue to provide as much community benefit, especially considering other changes likely to occur at the federal and state government level.
  • AMITA Health will always continue to accept patients regardless of their ability to pay, but our mission to provide compassionate and exceptional care extends beyond our doors. Any additional tax burden will negatively impact AMITA Health’s ability to provide wholistic care in a highly personalized environment to all those we are privileged to serve.
  • To help you better understand what community benefit looks like across the system, and dive deeper into the topic of community benefit click here.

What is the AMITA Health perspective?

  • Protect tax exempt status for hospitals. Keeping in place the current law would allow AMITA Health ministries to continue to provide the service and community benefit to vulnerable populations across the state rely on.
  • Tax exempt status protects community benefit. If the law is overturned by the courts, AMITA Health would support Illinois passing a replacement law that would provide tax relief for organizations that provide significant community benefit.

Featured News

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