HB0826 96TH GENERAL ASSEMBLY

LRB096 09420 JDS 19577 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB0826

Introduced 2/9/2009, by Rep. William B. Black

SYNOPSIS AS INTRODUCED:

35 ILCS 200/15-65

Amends the Property Tax Code. In a provision concerning tax exemptions for charitable purposes, sets forth requirements that a hospital must meet to be deemed to be actually and exclusively used for charitable purposes. Effective immediately.

FISCAL NOTE ACT MAY APPLY

HOUSING AFFORDABILITY IMPACT NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Property Tax Code is amended by changing Section 15-65 as follows:

(35 ILCS 200/15-65)

Sec. 15-65. Charitable purposes. All property of the following is exempt when actually and exclusively used for charitable or beneficent purposes, and not leased or otherwise used with a view to profit:

(a) Institutions of public charity.

(b) Beneficent and charitable organizations incorporated in any state of the United States, including organizations whose owner, and no other person, uses the property exclusively for the distribution, sale, or resale of donated goods and related activities and uses all the income from those activities to support the charitable, religious or beneficent activities of the owner, whether or not such activities occur on the property.

(c) Old people's homes, facilities for persons with a developmental disability, and not-for-profit organizations providing services or facilities related to the goals of educational, social and physical development, if, upon making application for the exemption, the applicant provides affirmative evidence that the home or facility or organization is an exempt organization under paragraph (3) of Section 501(c) of the Internal Revenue Code or its successor, and either: (i) the bylaws of the home or facility or not-for-profit organization provide for a waiver or reduction, based on an individual's ability to pay, of any entrance fee, assignment of assets, or fee for services, or (ii) the home or facility is qualified, built or financed under Section 202 of the National Housing Act of 1959, as amended.

An applicant that has been granted an exemption under this subsection on the basis that its bylaws provide for a waiver or reduction, based on an individual's ability to pay, of any entrance fee, assignment of assets, or fee for services may be periodically reviewed by the Department to determine if the waiver or reduction was a past policy or is a current policy. The Department may revoke the exemption if it finds that the policy for waiver or reduction is no longer current.

If a not-for-profit organization leases property that is otherwise exempt under this subsection to an organization that conducts an activity on the leased premises that would entitle the lessee to an exemption from real estate taxes if the lessee were the owner of the property, then the leased property is exempt.

(d) Not-for-profit health maintenance organizations certified by the Director of the Illinois Department of Insurance under the Health Maintenance Organization Act, including any health maintenance organization that provides services to members at prepaid rates approved by the Illinois Department of Insurance if the membership of the organization is sufficiently large or of indefinite classes so that the community is benefited by its operation. No exemption shall apply to any hospital or health maintenance organization which has been adjudicated by a court of competent jurisdiction to have denied admission to any person because of race, color, creed, sex or national origin.

(e) All free public libraries.

(f) Historical societies.

(g) Notwithstanding any other provision of law, for any assessment year for which an application has been filed and a decision on which has not become final and nonappealable as of the effective date of this amendatory Act of the 96th General Assembly, real property that is used in furtherance of the establishment, operation, administration, preservation, security, repair, or maintenance of a not-for-profit hospital is deemed to be actually and exclusively used for charitable purposes if all of the following requirements are satisfied:

(1) The hospital benefits the general welfare of an indefinite number of persons by providing health care to persons in its community in a way that does not discriminate based on race, religion, gender, or national origin.

(2) The hospital does not have capital stock or shareholders and none of the hospital's net earnings inure to the benefit of private individuals, as the private inurement standard is interpreted under Section 501(c)(3) of the Internal Revenue Code.

(3) The majority of the hospital's operating funds are derived from and used for the provision of health care services or donations.

(4) The hospital dispenses charity to all who need and apply for it and does not place obstacles in the way of those who need and would avail themselves of its charitable benefits. This standard is satisfied if:

(A) The hospital provides emergency services, as required under the Hospital Licensing Act, to patients regardless of their ability to pay;

(B) The hospital provides financial assistance to patients in accordance with a written policy that is based on community need, the available resources of the hospital, and other factors that may be unique to the hospital, such as the hospital's volume of Medicare and Medicaid patients; and

(C) The hospital provides notice of the availability of financial assistance to patients by posting signs that are visible to the public in the hospital and by including such a statement on or with the bill that is sent to uninsured patients.

Notwithstanding any other provision of law, a hospital does not fail to satisfy the requirements of this item (4) by requiring verification of a patient's financial condition before providing financial assistance or by pursuing collection from a patient who does not apply or qualify for financial assistance under the hospital's written financial assistance policy.

(5) The hospital's property is actually and factually used in furtherance of providing health care, including but not limited to gift shops, cafeterias, and parking facilities that are used by patients, visitors, and staff, and facilities for staff and community education. A hospital does not fail to satisfy this standard by entering into independent contracts with providers of services to the hospital or its patients, provided that such contracts are entered into on an arm's length basis. If a hospital leases property that is otherwise exempt under this subsection to an organization that conducts an activity on the leased premises that is in furtherance of the establishment, operation, administration, preservation, security, repair, or maintenance of the hospital, then the leased property is exempt. If a not-for-profit organization leases property that is otherwise exempt under this subsection to an organization that conducts an activity on the leased premises that would entitle the lessee to an exemption from real estate taxes if the lessee were the owner of the property, then the leased property is exempt.

(6) The hospital's property is primarily used in furtherance of providing health care. This standard is satisfied if the use of the hospital's property for health care is not simply an incidental or secondary use.

Property otherwise qualifying for an exemption under this Section shall not lose its exemption because the legal title is held (i) by an entity that is organized solely to hold that title and that qualifies under paragraph (2) of Section 501(c) of the Internal Revenue Code or its successor, whether or not that entity receives rent from the charitable organization for the repair and maintenance of the property, (ii) by an entity that is organized as a partnership, in which the charitable organization, or an affiliate or subsidiary of the charitable organization, is a general partner, for the purposes of owning and operating a residential rental property that has received an allocation of Low Income Housing Tax Credits for 100% of the dwelling units under Section 42 of the Internal Revenue Code of 1986, or (iii) for any assessment year including and subsequent to January 1, 1996 for which an application for exemption has been filed and a decision on which has not become final and nonappealable, by a limited liability company organized under the Limited Liability Company Act provided that (A) the limited liability company receives a notification from the Internal Revenue Service that it qualifies under paragraph (2) or (3) of Section 501(c) of the Internal Revenue Code; (B) the limited liability company's sole members, as that term is used in Section 1-5 of the Limited Liability Company Act, are the institutions of public charity that actually and exclusively use the property for charitable and beneficent purposes; and (C) the limited liability company does not lease the property or otherwise use it with a view to profit.

(Source: P.A. 91-416, eff. 8-6-99; 92-382, eff. 8-16-01.)

Section 99. Effective date. This Act takes effect upon becoming law.