For more than 150 years, nonprofit hospitals in the state of New Jersey have been exempt from real property taxes. Specific statutory provisions that provide for property tax exemptions have existed for more than 100 years. However, the manner in which nonprofit hospitals operate has changed significantly in recent years, calling into question whether some nonprofit hospitals meet existing statutory requirements for exemption. This issue was the subject of a recent Tax Court decision involving Morristown Memorial Hospital.
In AHS Hospital Corp., d/b/a Morristown Memorial Hospital v. Town of Morristown, 28 N.J. Tax 456 (Tax Ct. 2015), Judge Vito L. Bianco, J.T.C., of the New Jersey Tax Court was confronted with a case of first impression. It was the first time a nonprofit hospital’s entire property tax exemption was called into question before the court. After an exhaustive opinion, the court found that the majority of the hospital facility failed to meet the statutory qualifications for tax exemption, and upheld the denial of a local property tax exemption on all but a few areas of the hospital’s facilities located in Morristown.
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