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Status as a not for profit corporation does not automatically qualify a corporation for exemption from property taxes. The legal tests vary from jurisdiction to jurisdiction, and may vary between property tax and income tax legislation. Some jurisdictions may require restrictions on business activities and associations as part of the legal test for tax exemptions.

In this article, a medical centre in New Jersey failed to meet the requirements/legal test of a non-profit organization for property tax purposes. A tax court Judge ruled that a medical center in New Jersey should pay property taxes on virtually all of its 40-acre property in town. Central to the decision was the judge’s observation that the not for profit hospital also had “labyrinthine corporate structures, intertwined with both non-profit and for-profit subsidiaries and unaffiliated corporate entities.”

Read the article here.

Take away:

  • Not for profit corporations that are intertwined with for-profit corporations may not be eligible for property tax exemptions in some jurisdictions.



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