From NJ Spotlight, June 29, 2015
Nonprofit hospitals across New Jersey could be liable for millions of dollars in annual property taxes, under a ruling by a tax-court judge that highlighted the difficulty in separating the charitable and for-profit activities of hospitals and other organizations.
The judge found that Morristown Medical Center had so intermingled its nonprofit and for-profit services and finances that it could no longer qualify for a tax exemption under state law. Morristown’s municipal government had tried to eliminate the exemption in 2006, prompting a case that’s been in court ever since.
Hospital officials had argued that the organization follows long-established and universal practices by hosting services offered by both doctors employed by the hospital and self-employed physicians who operate for-profit businesses. But Judge of the Tax Court Vito Bianco, in examining the history of hospitals, found that they had strayed from the strictly charitable function they served when they were originally granted exemptions.