A healthcare association denied tax-exempt status by the Internal Revenue Service has appealed the decision to U.S. Tax Court in Washington. The petition by the John Gabriel Ryan Association, an ancillary services organization sponsored by 17-hospital Providence Health System, Seattle, appeared on the court's online docket yesterday. The association's only activity is ownership and operation of five ancillary joint ventures between Providence hospitals and affiliated physicians in Alaska, California, Oregon and Washington. Four of the ventures are fully controlled by not-for-profits, while the fifth is controlled equally by for-profit and not-for-profit interests. The association, established in 1985 and reorganized a decade later, applied for tax-exempt status in 1998. In its request for a declaratory judgment declaring it a charitable organization, the association argues that all the joint ventures contribute to Providence's charitable mission and in the case of the fifth, a binding guarantee ensures that the charitable mission is served. In an Oct. 15 letter, the IRS advised the association that it isn't eligible for tax-exempt status because its activities benefit private interests significantly and because it doesn't operate exclusively for charitable purposes. -- by Mark Taylor
Group contests denial of tax-exempt status
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