Importantly, the Court instructed that the third criterion does not preclude charging for services and denying service to those who cannot pay the charges. The decision is potentially helpful to all charities that charge for their services.The Statutory Exemption MCL 211.7o(1) provides Michigan’s property tax exemption for charities as follows: Real or personal property owned and occupied by a nonprofit charitable institution while occupied by that nonprofit charitable institution solely for the purposes for which that nonprofit charitable institution was incorporated is exempt from the collection of taxes under this act.The Lead case, Wexford, Provided Six Guidelines for a Chartable Institution Following a review of earlier decisions, the Court provided six guidelines for determining whether an entity is a charitable institution for purposes of the property tax exemption: A “charitable institution” must be a nonprofit institution. A “charitable institution” is one that is organized chiefly, if not solely, for charity.

Last month, the Michigan Court of Appeals issued an opinion in Trinity Health-Warde Lab, LLC v. Township of Pittsfield, 2016 Mich. App. Lexis 2026, Case No. 328092, which disallowed a for-profit laboratory to utilize the tax-exempt status of its charitable parent corporation when it itself is not a nonprofit entity.The case arose in the Michigan Tax Tribunal when Trinity Health-Warde Lab, LLC sought tax exemption for its Lab in Pittsfield Township by claiming exemption through its parent, Trinity Health Michigan which is a charitable institution under MCL 211.7o. The Lab is a wholly owned subsidiary of Trinity Health, and other nonprofit hospitals used the facilities under a co-tenancy laboratory agreement.

The Court of Appeals disagreed. Under the General Property Tax Act, property-tax exemptions are reserved for real property held in a nonprofit trust (MCL 211.7r) or owned or occupied by a nonprofit charitable institution (MCL 211.7o). Based on a reading of the plain language of those statutes, the court ruled, the Lab’s for-profit character precluded it from claiming either exemption.

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.