Court overturns Illinois law on hospitals’ tax exemptions

An Illinois appeals court has ruled that a law defining what not-for-profit hospitals have to do to get tax breaks is unconstitutional. The law says that the value of certain charitable and other services offered by a hospital must exceed the estimated value of its property tax liability if the hospital expects to get a property- and sales-tax exemption. It was passed after the Illinois Supreme Court, in 2010, upheld a decision to revoke Provena Covenant Medical Center’s exemption. The Urbana hospital is now part of Presence Health.

The most recent case involved the city of Urbana and other local taxing districts. Carle Foundation Hospital had been seeking relief from taxes for 2004 to 2011. A lower court sided with the hospital, but the appeals court reversed that decision, saying the Illinois Constitution allows lawmakers to exempt only property “used exclusively” for “charitable purposes.”