Recent Developments in the Law Portend of Widespread Reconsideration of This Question

This post was written by Dusty Elias Kirk with Contribution from Kyle Smith.

Courts in a number of states are reconsidering how to determine whether a property owner, often a nonprofit entity, is entitled to a property tax exemption or other special property tax treatment. More than ever before, state and local governments are questioning the purpose for granting such organizations tax-exempt status, and whether that purpose is being advanced when they grant such an exemption. The stakes are high, in terms of both potential additional tax burdens to nonprofits, and increased tax revenues collectible by state and local governments.

Three recent Pennsylvania court decisions, as well as legal developments in other states, portend a new national trend for state and local governments to successfully challenge the favorable property tax treatment that certain organizations – including not-for-profit hospitals and universities – have received historically. The article found here summarizes these developments in the law.