May 17,2016
the staff of the Ridgewood blog
Ridgewood NJ, In a closely watched property tax case with significant financial and policy implications for hospitals and possibly the broader non-profit community statewide,and the Village of Ridgewood , a Tax Court of New Jersey judge on June 25, 2015, ruled that Morristown Medical Center is not entitled to tax exemption on nearly all of its property in Morristown.
In Ridgewood ,Valley’s main campus would be rated for tax purposes at over $4 million per year. EVERY district was won by Voight, Walsh and Hache in a total rejection of the mayor and his policies .Given the statement made in Tuesday’s election, there would be popular support behind pursing this revenue using any and all means necessary.
Noteworthy elements of the Morristown decision:
Except for some very narrow exceptions such as its parking garage, auditorium and fitness center, almost all of the hospital’s property was deemed to be taxable for failing the “profit” test (see below) because non-profit and for-profit activities were significantly commingled and conferred substantial benefits on the for-profit entities as a result.
Compensation was a significant factor in the opinion. Although IRS guidelines have for years allowed exempt organizations to establish the reasonableness of compensation under federal law by analyzing compensation levels against those of comparable organizations, the judge dismissed such a standard as insufficient because the hospital failed to also verify that the compensation at the other comparable institutions was itself also reasonable. In essence, this ruling disregards the IRS framework for reasonableness of compensation in use by thousands of charities nationwide.
In his conclusion, the judge stated that if all hospitals in their current form are structured like Morristown then none are justified in receiving property tax exemption, and it’s up to the legislature to enact statutory changes that would change this framework.
On November 11, 2015, a settlement was announced between Atlantic Health System (the parent of Morristown Medical Center) and the Town of Morristown, in which the hospital agreed to pay $15.5 million in back taxes and penalties, plus annual property taxes on 24 percent of the hospital’s property from 2016 to 2 . (https://www.njnonprofits.org/PropertyTax_MorristownMedical.html)
It is hard to argue that these same or similar elements would apply Valley Hospital as Well.
good news.
Great news, can we get back taxes also? Paying Audrey $1.7 to $2 million a year should assist Ridgewood in winning this case. Keep suing us, well now it’s your turn. How much does Valley pay to have their names on the Little league baseball sleeves? This makes me sick. Throwing pennies at us is an insult. Move to Paramus and do the right thing
she make that much, my god.
$15mn in back taxes and annual property taxes of $4mn would help us reduce the tax burden on Village residents.. Jeff and Ramon both should understand this and they got the most votes
This is a “no brainer” for the new council. The greed mentality has gotten Valley into an awful lot of trouble. Time to start collecting.
yes so true.