SCOMI blog

Trial Lawyers’ Bottom Line: Any restriction of recipients by a charitable institution must be reasonably related to the organization’s legitimate charitable goals.

Baruch is a nonprofit corporation registered as a tax exempt for its operation of Stone Crest Assisted Living, an adult foster care facility. For the years 2010–2012, Baruch sought tax-exempt status for real and personal property taxes under MCL 211.7o and MCL 211.9. The Tax Tribunal held that Baruch failed to satisfy three of the six Wexford factors. The Court of Appeals affirmed the tribunal’s judgment, but only regarding the third Wexford factor, which requires a charitable institution not to offer its charity on a discriminatory basis. The Supreme Court granted leave to appeal the Court of Appeals’ determination of the third Wexford factor.

Trial-lawyers’ bottom line: For-profit schools are eligible for tax exemption under MCL 211.9(1).

SBC Health Midwest ran Sanford-Brown College Grand Rapids, a for-profit school located (oddly) in Kentwood, Michigan. SBC requested a tax exemption for the school under MCL 211.9(1). The City of Kentwood denied it. SBC appealed the decision to the Michigan Tax Tribunal, which also denied the exemption, holding that the statute provides an exemption for nonprofit schools only. SBC appealed again, finally winning in the Court of Appeals, which reversed the tax tribunal’s decision. The Supreme Court granted leave to appeal; the question was whether a for-profit school could avail itself of the property exemption in MCL 211.9(1)(a).