Dive Brief:
- Legal arguments in a major challenge regarding the University of Pennsylvania Medical Center's tax exemption begin early next month.
- The challenger, the city of Pittsburgh, contends that UPMC has employees, but it asserts that its subsidiaries, not UPMC, actually employ staffers.
- If UPMC loses, it could face up to $32.4 million in property taxes on $1.3 billion in properties, plus be forced to pay a gross payroll tax of 0.55 percent for approximately 40,000 employees.
Dive Insight:
If UPMC loses its tax battle, not-for-profit hospitals across the U.S. have something to fear. So far, very few government entities have won the battle to strip hospitals of their tax-exempt status, but with ACA rules coming into place which could lead to stricter scrutiny by the IRS, nobody's sure whether their hospital is safe or not. Next year should be an interesting year for charity care, and maybe a time for hospitals to restructure how they document their charitable activities.