County nonprofits expected to justify tax breaks
January 30, 2013
Allegheny County Executive Rich Fitzgerald announced at a meeting on Tuesday, Jan. 22, that the county will begin asking many of the nonprofit organizations that do not pay taxes on their properties for proof that they deserve the exemptions.
Amie Downs, communications director of the County Executive’s office, said that the county intends to review the records of organizations that receive tax exemptions by filing, but the county expects to send letters to about 9,000 institutions.
While she said that the total number of tax-exempt properties is around 26,000, most are owned by the government.
Downs added that the county executive’s office expects to send the first of these letters asking nonprofits to justify their tax-exempt statuses in about two months, but has not yet finalized the details of this unprecedented effort on the county level.
“There’s never been an undertaking this large,” she said.
Downs explained that the county council passed legislation in 2007 that required a triennial review of eligibility for tax exemption on property filed as purely public charities.
At the time, Fitzgerald was still serving on the Allegheny County Council. Now, as an executive, he has the authority to implement the legislation.
Pitt and UPMC are among the organizations that file for exemption from county property taxes. Downs had no information on whether she expected the initiative to affect either institution.
Downs explained that the institutions will be subjected to the five-part HUP test, an acronym taken from the title of a Pennsylvania Supreme Court case that outlined the requirements an organization must meet in order to qualify as a purely public charity under state law.
One stipulation of the test states that an organization must operate without a profit motive in order to qualify. Those organizations that do qualify as purely public charities are exempt from paying taxes on properties they own.
University spokesman John Fedele confirmed that Pitt does file as a nonprofit. However, it also pays taxes on properties that are not part of its mission, such as the storefronts in Sennott Square, which the University leases to businesses.
Fedele had no additional information on how the audit would affect Pitt’s status.
UPMC could not be reached for comment.