Could your nonprofit lose its property tax exemption? Lessons from recent court decisions

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Abstract: A Pennsylvania state court revoked a nonprofit hospital’s property tax exemption in a lawsuit filed by a local school district. The court’s ruling turned primarily on its finding that the hospital failed to show that it operated without a profit motive. Although the case involved a state-specific test for tax-exempt status, this article is worth reviewing for nonprofits everywhere because other state courts and tax assessors may adopt similar reasoning. A brief sidebar looks at a New York case in which the court found that, even if a property provides a public benefit, the overall use can’t be deemed charitable under New York state law if it’s to further economic development and reduce burdens on government. Source: Pottstown School District, Appellant v. Montgomery County Board of Assessment Appeals, Pottstown Hospital, LLC, Pottstown Borough and County of Montgomery, 289 A.3d 1142 (Pa. Cmmw. Ct. 2023); Catskill Watershed Corp. v. Assessor of the Town of Middletown, 2023 N.Y. Slip Op. 3055 (N.Y. App. Div. 2023).