« Ind. Decisions - "Hospital rezoning opponents lose appeal" [Updated] | Main | Ind. Decisions - Court of Appeals issues 3 today (and 11 NFP) »

Wednesday, September 30, 2009

Ind. Law - "Did an amendment to this year’s state budget open the door to tax refunds for nursing homes across the state?"

Following up on this ILB entry from Sept. 24th, quoting from a story by Jennifer Tangeman of the Logansport Pharos-Tribune, today the Fort Wayne Journal Gazette has this story, by Amanda Iacone, headed "Exemption for charity roils budget: For-profits seek tax break, too."

After last week's story, I'd hoped to learn some specifics, but so far that hasn't been the case. The Association of Indiana Counties is meeting this week, and I've heard the assessors are talking a lot about this, but no details. Can you help?

From today's JG story:

A section in the state budget has caused confusion on whether for-profit hospitals and nursing homes are exempt from property taxes.

At stake in Allen County is an estimated $30 million in back taxes and a possible future shift in how local government is funded. But a local state lawmaker said there should be no confusion, because lawmakers did not give businesses a break from property taxes.

The budget measure, which took effect this summer, gave charitable organizations until September to seek exemptions from property taxes and to recoup any taxes they paid during the past nine years if they were eligible for exemption during that time.

Nursing homes and hospitals have filed, too, hoping to be considered charities

In Allen County, exemptions were filed for more than 700 properties worth an estimated $1.5 billion in assessed value, according to the assessor’s office.

“It’s definitely a concern,” Assessor Stacey O’Day said. “This is huge.”

In addition to numerous nursing homes, exemption paperwork has been filed for the three hospitals owned by Lutheran Health Network. Parkview Health System’s two hospitals are already exempt from property taxes.

For-profit Lutheran is one of the top-paying property owners in the county with a $4.5 million tax bill this year. Reducing its share of property taxes could place more burden on other taxpayers.

But Chief Executive Officer Mike Schatzlein said the network’s accountants filed the paperwork to protect the company in case its charity care could help shrink its tax bill, not eliminate it. The company sought no more than 5 percent reimbursement, and the move was not meant to alter the business’s operating strategy, he said.

“People need to be aware of what’s at stake,” O’Day said. “This could affect everybody, because the burden will shift.”

State law defines which classes of properties are eligible to be exempt from property taxes. Schools, churches and charitable organizations like the YMCA are all exempt. The law also allows some health centers and homes for the aged who give charity care to be exempt.

But charities and non-profits sometimes miss filing deadlines or make mistakes on the paperwork and are denied their exemptions.

Over the years, the state legislature has periodically given those charities a reprieve, and the law passed this year aimed to be a permanent fix for those organizations – an idea urged by many legislators, said Rep. Jeff Espich, R-Uniondale.

In Allen County, not all of the 700 properties will qualify as a charitable organization. The county’s property tax assessment board of appeals will decide whether properties meet that definition and are exempt, O’Day said.

The word “charitable” is open to interpretation, and county officials are trying to understand what it means under state law, she said.

County officials plan to take their time in making those decisions in part because state lawmakers might change the law, O’Day said.

Espich said he is upset by what he’s hearing and doesn’t believe lawmakers created a loophole. But he’s ready to fix the problem and clear up any ambiguities, he said.

“I don’t know how these nursing homes believed they deserved that. Because our legal experts tell me that’s not true,” he said of the sought-after exemptions. “We tend to believe that some eager CPA firm or law firm or both has found this as a way they might in fact offer their services and/or secure clients.”

In my entry last week I wrote:
Where is this alleged exemption language? I've looked through the massive "budget" bill, HEA 1001ss. So far, the only thing that looks to be close is SECTION 479, a noncode provision.
But I wasn't at all sure this was it, because I didn't read it as applicable to for profits. Today's JG story quotes the same section, but I don't know how they came upon SECTION 479.

MORE about SECTION 479: This is a non-code section, meaning, as I have written many times before, that it will not be printed in the Indiana Code and will not be generally accessible to the public. It is available in this 511-page "budget bill" enacted at the last day (June 30) of the 2009 special session. It begins on p. 486.

For your convenience, I have extracted pp. 486-487 and posted them here.

MORE LATER

Posted by Marcia Oddi on September 30, 2009 11:36 AM
Posted to Indiana Law