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Nonprofit's tax-exempt status to get second look

Last modified: 1/14/2011 12:00:00 AM
The Supreme Court yesterday ordered the state tax appeals board to take a second look at the case of a Concord nonprofit, ruling that the question of whether the group qualifies for a charitable tax exemption depends on whether it exists primarily to benefit the public or to help its members.

The Home Care Association of New Hampshire is fighting a $2,500 tax bill it got from the city for its offices at 8 Green St. in 2006. For more than two decades, the city had granted the group an exemption from property taxes as a charitable organization.

City Manager Tom Aspell said the city looks closely at the many nonprofit groups based in Concord to make sure organizations are truly eligible for their annual tax exemptions.

'We want to make sure they're all being properly assessed so the tax bills are assessed fairly,' Aspell said yesterday, with the goal of 'making sure that the tax burden is equally distributed.'

The Home Care Association, formed in 1974, describes itself on its website as 'a membership organization which enhances the ability of agencies providing home health care to deliver quality services to New Hampshire residents.' Its members include visiting nurse associations and hospital-affiliated home-care groups.

The group is exempt from federal taxes as a 501(c)3 charitable organization and owns the two-story office building at Green and Blake streets, where it leases the second floor to another group.

The association paid the 2006 tax bill from the city for its first-floor offices but appealed the bill to the Concord Board of Assessors and then to the New Hampshire Board of Tax and Land Appeals, which granted it a charitable exemption.

The board found that the group benefits the public through its work, though mostly through its member organizations and not directly, according to yesterday's ruling. The city has argued that the Home Care Association is more of a trade group whose purpose is to benefit its member organizations, not the public.

The city of Concord appealed the exemption to the state Supreme Court, which handed down a unanimous decision yesterday vacating the tax appeal board's decision and remanding the case for a rehearing.

For a group to qualify for a charitable exemption, Associate Justice Gary Hicks wrote, 'that charitable mission must be its dominant or primary purpose.' But if any public benefit is incidental and a group's main purpose is to benefit its members, 'the organization will not meet this requirement,' he wrote.

In this case, he wrote, the tax board didn't determine if the public benefits of the association's work 'are merely incidental to a dominant or primary purpose . . . of benefiting HCA's members, or whether these benefits to the public are slight, negligible or insignificant when compared to the benefit derived by HCA's members.'

The board is now to reconsider the case with the court's ruling as a guide. Its decision will affect the group's tax status in 2006 and subsequent years.

Concord attorney Chris Sullivan, who represents the association, said the group can still prove its eligibility for the charitable exemption. He said the court's ruling helped clarify that direct service to the public is not a requirement for a charitable exemption.

'We look forward to presenting the evidence on remand that supports the court's additional guidance,' Sullivan said.

But, he said, the group is open to settling the case out of court.

'Both the city and the association have expended considerable resources considering $2,500 in property taxes. . . . We'd always be looking for appropriate ways to resolve the case,' Sullivan said.

The city's lawyer, Lebanon attorney Adele Fulton, didn't return a message yesterday seeking comment.

Kathy Temchack, the city's director of real estate assessments, declined to comment on the case before speaking to the city's lawyer. Susan Young, the association's executive director, also declined to be interviewed yesterday without consulting with the group's attorneys.

Also at issue in the case is whether the association's advocacy arm, Granite State Home Health Association, which shares the association's offices, is exempt from taxes. The court ruled that the board should consider 'any allocation of exempt and non-exempt use' when it rehears the case.

(Ben Leubsdorf can be reached at 369-3307 or bleubsdorf@cmonitor.com.)


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