VSP case may go to Supreme Court, affect all nonprofits

Brace yourselves, people, for the next major sea-change in healthcare. If the U.S. Supreme Court decides to take on the case of Vision Service Plan vs. the IRS, its decision could have an effect on the non-profit status of many healthcare institutions.

Vision Service Plan is the nation's largest provider of vision insurance plans that cover eyeglasses and contact lenses. The legal battle started back in 2003, when the IRS revoked VSP's 501c4 status as a tax-exempt social welfare organization, a status it had held since 1960.

VSP appealed the decision, but in 2005 a federal district judge in California decided against it, saying that VSP failed to prove that it is not organized for profit. Now they have hired Kenneth Starr, Whitewater independent counsel, and appealed to the Supreme Court to resolve the case.

It's still not clear whether the Supremes will hear the case. However, if they do, their decision will have major implications for the nonprofit world, especially for healthcare, where some nonprofit hospitals already face challenges to their tax exemptions.

To learn more about the case:
- read this Forbes piece

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