St. David's Health Care System, Austin, Texas, said it had been told by an Internal Revenue Service agent that the system's six-hospital joint venture with HCA, Nashville, met the community benefit standard for tax-exempt status. The information came in St. David's 71-page response to the IRS' pending appeal of a June 2002 summary judgment. The judgment ordered the IRS to reinstate St. David's tax exemption and return $1.2 million in taxes paid under protest. According to St. David's, the IRS agent who headed a 1998 audit of the system conceded in a "deposition that is binding upon the IRS" that the joint-venture hospitals met "all the substantive requirements (of the) community benefit standard." The case is pending before the 5th U.S. Circuit Court of Appeals, New Orleans. The IRS does not comment on pending cases. St. David's and HCA formed their joint venture in 1996. The IRS revoked St. David's tax exemption in 2000, saying "more than an insubstantial part of (the system's) activities is devoted to a nonexempt purpose." -- by Mark Taylor
St. David's: IRS already conceded tax-exempt issue
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