http://www.nytimes.com/2008/05/26/us/26tax.html?_r=1&hp&oref=slogin
Exemptions for Charities Face New Challenges
function getSharePasskey() { return ‘ex=1369454400&en=08bfc53f7a0b4955&ei=5124′;}
function getShareURL() {
return encodeURIComponent(‘http://www.nytimes.com/2008/05/26/us/26tax.html’);
}
function getShareHeadline() {
return encodeURIComponent(‘Exemptions for Charities Face New Challenges’);
}
function getShareDescription() {
return encodeURIComponent(‘The Minnesota Supreme Court’s ruling that a day care agency had to pay taxes because it essentially gave nothing away has alarmed nonprofit groups.’);
}
function getShareKeywords() {
return encodeURIComponent(‘Nonprofit Organizations,Decisions and Verdicts,Colleges and Universities,Property Taxes,Taxation,Day Care Centers,Courts,Minnesota,Massachusetts,Connecticut,Senate Committee on Finance,Harvard University,Connecticut College,Smith College,Mall of America,Russell A Anderson’);
}
function getShareSection() {
return encodeURIComponent(‘us’);
}
function getShareSectionDisplay() {
return encodeURIComponent(‘US’);
}
function getShareSubSection() {
return encodeURIComponent(”);
}
function getShareByline() {
return encodeURIComponent(‘By STEPHANIE STROM’);
}
function getSharePubdate() {
return encodeURIComponent(‘May 26, 2008′);
}
<!–
function submitCCCForm(){
PopUp = window.open(”, ‘_Icon’,'location=no,toolbar=no,status=no,width=650,height=550,scrollbars=yes,resizable=yes’);
this.document.cccform.submit();
}
// –>
Published: May 26, 2008
RED WING, Minn. — Authorities from the local tax assessor to members of Congress are increasingly challenging the tax-exempt status of nonprofit institutions — ranging from small group homes to wealthy universities — questioning whether they deserve special treatment.
One issue is the growing confusion over what constitutes a charity at a time when nonprofit groups look more like businesses, charging fees and selling products and services to raise money, and state and local governments are under financial pressure because of lower tax revenues.
And there are others: Does a nonprofit hospital give enough charity care to earn a tax exemption? Is a wealthy university providing enough financial aid?
In a ruling last December that sent tremors through the not-for-profit world, the Minnesota Supreme Court said a small nonprofit day care agency here had to pay property taxes because, in essence, it gave nothing away.
The agency, the Under the Rainbow Child Care Center, charges the same price per child regardless of whether their parents are able to pay the full amount themselves or they receive government support to cover the cost.
While I don’t know that changes in the tax laws are warranted, it certainly seems to bear examination. Such an examination could yield new taxes, if current non-profits are required to pay taxes, or more public benefits as non-profits are forced to actually provide a higher level of service, or some service at all, to qualify for tax exempt status.
It does seem the Minnesota ruling can be pretty narrowly interpreted, since the non-profit in question seems to be a child-care business operating exactly as any for-profit operation would.
I do expect there are some very fine hairs to be split over this before any significant examination is made, and certainly well before any tax code changes are proposed.
Paul
