Illinois high court affirms tax break for not-for-profit hospitals

A property tax exemption benefiting the state's not-for-profit hospitals was affirmed today by the Illinois Supreme Court.

In a unanimous opinion, justices upheld a 2016 appellate court ruling on the constitutionality of a six-year-old state law that allows not-for-profit hospitals to offset expenditures deemed charitable against their property tax liability.

Each of the state's 157 not-for-profit hospitals has taken full advantage of the exemption, according to the Illinois Health & Hospital Association, which intervened in the case as a defendant-appellee. Medical office buildings and other nonexempt properties operated by not-for-profits do pay property taxes, it says.

The property tax exemptions are worth tens of millions of dollars for some of Chicago's biggest hospitals.

The plaintiff in the case, filed in 2012 in Cook County Circuit Court, argued that the newly enacted section of the property tax code was "facially" unconstitutional because exemptions were permitted only on certain properties, including those "used exclusively" for charitable purposes.

The justices disagreed, saying the General Assembly was "certainly aware" of the constitution's requirement of "exclusive charitable use, and it intended to enact a constitutional charitable property tax exemption."

Edward Joyce and Kenneth Flaxman, Chicago attorneys who represented plaintiff Constance Oswald, identified as a Cook County taxpayer, did not return calls seeking comment.

The hospital association said the exemption is a boon for financially stressed hospitals and low-income patients.

"Illinois high court affirms tax break for not-for-profit hospitals" originally appeared in Crain's Chicago Business.