Losing Tax Exemption

The reason the IRS provides a tax exemption to nonprofit organizations is because they provide a public service.

To take away any part of that tax exemption, as might be happening in Boston—along with other cities, like Albany and Baltimore, considering similar policies—unless a case can be made that the nonprofits in question are no longer providing the publics service which earned them nonprofit status, is wrong.

An excerpt from the Boston Globe.

“Boston’s hospitals, universities, and other tax-exempt nonprofits may be asked to contribute tens of millions of dollars more to city coffers to help pay for basic municipal services such as police and public works.

“After 14 months, a mayoral task force has nearly completed its work examining the city’s uneven system of individual agreements with such institutions, under which they voluntarily pay cash and provide services in lieu of property taxes. Some pay millions; others pay significantly less.

“The city is pushing institutions to gradually increase contributions to 25 percent of what they would owe in taxes if they were not exempt, a change that would more than triple the current amounts paid by some of the city’s biggest landowners.

“Hospitals and universities say that higher payments in lieu of property taxes would force them to lay off workers and pass on to students and patients higher tuition and medical costs.

“The new formula, which the city panel will begin finalizing at a meeting today, would seek to increase payments among hospitals and universities alone by almost $25 million over five or more years, according to preliminary figures.


“To soften the blow, officials have suggested that institutions could cover up to 50 percent of their payments by offering community programs such as free prostate cancer screenings in public housing and scholarships for Boston students.”