Wisconsin court: Nonprofit hospital clinic is non-tax-exempt 'doctor's office'

Nonprofit hospitals across Wisconsin could find their tax-exempt status at risk due to a recent state Court of Appeals ruling, reports The Business Journal of Milwaukee. The court found that St. Joseph Outpatient Center in Wauwatosa, a unit of Milwaukee-based Wheaton Franciscan Healthcare, is a "doctor's office," which is not a tax-exempt entity.

"The decision, if allowed to stand, will have a far-reaching impact on Wisconsin nonprofit hospitals," David Edquist, a lawyer with Milwaukee firm von Briesen & Roper SC, told The Business Journal. "Potentially, any freestanding outpatient department of a hospital could now be re-characterized as a doctor's office." The ruling potentially could apply even to outpatient facilities onsite at primary hospital campuses, he pointed out.

"Left unchallenged, the court's decision, unfortunately, could reduce a hospital's ability to provide services in some communities, reducing access to healthcare services at the very moment we should be focused on strengthening Wisconsin's healthcare infrastructure," Laura Leitch, general counsel for the Wisconsin Hospital Association, told The Business Journal.

The Institute for Wisconsin's Future, a nonprofit research group based in Glendale, contends that nonprofit hospitals should receive a break on their income taxes, but pay property taxes just like individuals and for-profit corporations that make charitable donations. The Institute estimates that the state could reap $127.6 million in annual property taxes from nonprofit hospitals.

To learn more:
- read this article from The Business Journal of Milwaukee
- read this Winona Daily News article

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