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April 02, 2016

MSC grants mini-oral argument to address the definition of “discriminatory basis” for purposes of obtaining tax exemptions as a charitable institution

In Baruch SLS, Inc v Township of Tittabawassee, No. 152047, the Michigan Supreme Court granted mini-oral argument to consider the definitions of “charitable institution” and “discriminatory basis” in the context of real and property tax exemptions available to charitable institutions under MCL 211.7o.  Baruch is a non-profit organization created to provide home healthcare and other senior lifestyle services.  In the admissions process, Baruch does not consider race, religion, color or national origin.  The applicant must, however, have the ability to pay at the outset. 
 
Baruch applied for a tax exemption as a charitable institution for the 2010, 2011, and 2012 tax years.  The Michigan Tax Tribunal denied the application.  After applying the six factors set forth in Wexford Medical Group v City of Cadillac, 474 Mich 192 (2006), for determining whether an organization is a “charitable institution,” the Court of Appeals affirmed.  The court held that Baruch’s policy of conditioning admission on the applicant’s ability to pay was discriminatory.  Thus, Baruch was not a “charitable institution” such that it was entitled to tax exemptions. 
 
The Michigan Supreme Court granted mini-oral argument to determine whether to grant leave to appeal.  Specifically, the Michigan Supreme Court directed the parties to address the issues of:
 
(1) whether Wexford correctly held that an institution does not qualify as a “charitable institution” if it offers its charity on a “discriminatory basis”;
(2) if so, what is the proper definition of “discriminatory basis”;
(3) the extent to which the relationship between an institution’s written policies and its actual distribution of charitable resources is relevant to that definition; and
(4) whether, in light of the resolution of these issues, Baruch was entitled to a tax exemption.

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