Ruling throws Illinois hospitals’ tax exemptions into question

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 ruling is yet another setback for not-for-profit hospitals, which have come under increased scrutiny in recent years over their tax exemptions.

The 2012 Illinois law was meant to provide clarity around exemptions for hospitals.

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 it’s to get a property and sales tax exemptions. The law was passed after the Illinois Supreme Court, in 2010, upheld a decision to revoke Provena Covenant Medical Center’sproperty-tax exemption, worrying other nonprofits across the state. (The Urbana, Ill., hospital is now part of Presence Health.)