Allentown charges nonprofit Good Shepherd $700,000 in business taxes
The lawsuit, filed this month, argues that Good Shepherd, which operates a rehabilitation hospital in the city's
Exactly what those taxable activities are is information typically protected by strict tax-privacy laws. Who
According to the appeal,
That assessment was later revised to
That figure is about 10 percent of
According to an appeal board's findings, Good Shepherd provides administrative services that include accounting, financial management, fundraising, human resources, information systems and maintenance to subsidiaries in its care network, a collection of taxable and tax-exempt corporations.
Taxes were assessed on the following revenue streams: -- Contributions, gifts and grants; -- Management fees collected for administrative services offered by Good Shepherd to its care network; -- Investment income derived from investments managed on behalf of the care network; -- Gross rent generated by leases on property Good Shepherd owns for possible future hospital expansion; -- Expense reimbursement which includes income from reimbursements made by the care network to Good Shepherd in exchange for managing debt service; --
The appeal board ruled that all of the above revenue was taxable except for contributions, gifts and grants. A total of
Reached for comment Wednesday, Good Shepherd provided a statement:
"As a non-profit entity, Good Shepherd provides vital health-care services to our community. At this time, our preference is to have the legal process run its course and determine the merits of the city's assessment and our appeal."
The appeal board noted that Good Shepherd provides bonuses to its executive staff, a move courts have found to show "profit motive," according to the opinion. The decision also argued that Good Shepherd is not a purely public charity, the standard for tax exemption.
In its lawsuit against the city, Good Shepherd argued the tax was "unlawfully excessive, improperly determined and non-uniform." The suit also contends that the tax violates
The scope of nonprofits assessed by the city is unknown due to tax privacy laws, but the Good Shepherd case demonstrates how much revenue is at stake.
Good Shepherd is the first nonprofit to sue the city over the tax. Hartzell warned members of
A status conference in the Good Shepherd case has been scheduled for December before
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Good Shepherd tax bill
Good Shepherd Rehabilitation Network, a nonprofit and typically tax-exempt, was assessed a business privilege tax by
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610-820-6522
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