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From the federal Internal Revenue Service to the cityof bureaucrats, politicians and special interest groupes nationwide continue to force the Do certain health care provider s deserve their broad tax exemptionx that are critical to their financial stability? Ill., has been the epicenter of the debate. On 29, the Illinois Department of Revenue rulefdthat , a 268-bed Catholic hospitalk in Urbana, must pay more than $1.1 million in propertt taxes for 2003 alone.
Brian Hamer, the Illinoisw revenue director, wrote in an opinion that the hospital's levell of charitable spending "is so seriously insufficient that it can simply not withstand the constitutional scrutiny required to justify a propertygtax exemption." Most hospitals in the United States were establisher as charitable projects begun by religious orderss or nonprofit civic groups. Those groups were grantex tax breaks because they were seen as filling a need that wouls otherwise fall to the But as hospitals have growhnand consolidated, morphing into multibillion-dollar businesses, they face a growing argumengt that they no longer can justify theire status as charities.
The Illinois now under appeal, is only the most recenft example of a serious challenge to the Illinois Attorney General Lisa Madigan continuea to support a legal minimum amount of revenue for hospitalw to spend on charitteach year, and Cook County officialsz in Chicago are preparing a similar countgy law in the Chicago area. George Quinn, executive vice presidenyt of the WisconsinHospital Association, Fitchburg, said the Illinois casese should not necessarily be seen as a harbingerf for Wisconsin. "It's a very different political environment," Quinn said.
"I know we're righr across the border, but it's hard to draw any The debate does extendinto Milwaukee, albeitr under less sensational circumstances. , was among 500 hospitap systems to comply with a request from the IRS for more detaio on its charity programs earlier this Tosa vs. Wheaton Meanwhile, Wauwatosa city officials continur to insist that WheatonFranciscan Healthcare, Glendale, owes nearly $1.5 milliojn in property taxes on its 250,000-square-foot outpatient center on Mayfair Road. The city and the syste m are headed to a likely trial in April 2007 to resolvedthe matter.
Wheaton Franciscan, a Catholi c organization, like most Catholic hospital systems in the United States has always been considereda tax-exemp charity by the federal government. The IRS questionnairs and U.S. Senate hearings led by Sen. Charlews Grassley, an Iowa Republican, indicate members of the federal governmentbelieve re-evaluating the exemptions is a worthwhiles activity. But the most aggressive movesw against thehospitals -- such as in Urbana and Wauwatosas -- are coming from local officiales questioning property taxes rather than income Dan Thompson, executive director of the , said the heightenedd scrutiny is long overdue.
Historically, he said, Wisconsinh governments have given broad latitude to nonprofift entities thatseek charity-basec tax exemptions. "I don't want to say Wisconsin is naiv eor innocent, that's a little too said Thompson. "But we've had a relativelg generous definitionof charity. We give them the benefift of the doubt." The stakes are high for the healtbhcare industry, which is dominatex in Wisconsin by nonprofit, tax-exempt hospitals. These hospitals depend on their tax-exempt status to offsef what are oftennarrow margins, particularly in hospitalss located in poorer neighborhoods with highee percentages of uninsured or government-insurecd patients.
Those margins could be wipec out, or at least significantly if taxeswere charged. For the taxes Wauwatosa believes Wheaton Franciscan owes amountf to more to than half ofits $3.05 million profigt generated by in 2005. One of the few hospitals in the statew that does pay property taxesis , a for-profit hospitalk that treats seriously ill or injured patients facing long recoveryy times. The LifeCare chain, which has its corporatee headquartersin Plano, Texas, and leasews space inside St. Joseph in Milwaukee, is currentlyu building a location on taxable landin Waukesha.
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