News & Thought Leadership from Sulloway & Hollis
Legal Update: Charitable Tax Exemption
In The New London Hospital Association, Inc. v. Town of Newport, the New Hampshire Supreme Court reaffirmed the filing standards for charitable tax exemptions, providing a timely reminder for charitable organizations looking for tax relief. No. 2019-061, 2021 N.H. LEXIS 9 (February 9, 2021).
Under RSA 72:23-c, every religious, educational, charitable and veterans’ organization is required to file annually, “on or before April 15,” a list of property owned by the organization on which a tax exemption is claimed. The filing is made with the selectmen or assessors of the municipality where the property is located. RSA 72:23-c contemplates a hard deadline of April 15, however, if “any organization, otherwise qualified to receive an exemption, shall satisfy the selectmen or assessors that they were prevented by accident, mistake or misfortune from filing an application on or before April 15, the officials may receive the application at a later date and grant an exemption thereunder for that year.” However, the filing must still occur before the local tax rate has been approved for the year at issue.
In the New London Hospital case, the Hospital filed for a charitable tax exemption on the Newport Health Center for tax year 2016. However, the Hospital did not submit its charitable exemption form to the Newport selectmen until May 19, 2016. Critically, in submitting the late filing, the Hospital did not claim “accident, mistake or misfortune” to excuse its delay.
The Selectmen denied the Hospital’s application, finding that “the application for the exemption was untimely and because the level of charity care provided by the hospital is very small and it is a fee for service operation.” The Hospital appealed the selectmen’s decision to the superior Court. There, the Town moved for summary judgment, arguing that it was undisputed that the Hospital’s application was untimely. Moreover, the Town argued there was no evidence provided to the selectmen that the late filing was the result of “accident, mistake or misfortune,” the only basis under RSA 72:23-c to excuse delay. While the Hospital did not dispute that its submission was untimely, the Hospital argued that the Town waived any objection to the timeliness and that it could satisfy the statutory standard of “accident, mistake or misfortune.”
The Superior Court granted summary judgment in favor of the Town, finding that the Hospital’s application was properly denied because it was untimely under the statute. Critically, the Court determined that the Hospital had waived the argument that its late filing was caused by “accident, mistake or misfortune” because that argument was not presented to the selectmen. After unsuccessfully filing several other motions with the superior Court, the Hospital appealed to the New Hampshire Supreme Court.
The Supreme Court affirmed the Superior Court’s decision. In doing so, the Court focused on the plain language of RSA 72:23-c, providing that the exemption “shall” be filed annually on or before April 15. The Court further noted that because no argument was made to the selectmen that the late filing was a result of “accident, mistake or misfortune,” that the selectmen had no evidence by which to waive the mandatory filing deadline. While the Hospital made several additional arguments on appeal, the Supreme Court focused in on the need to adhere to the legislature’s established deadline for charitable exemption applications.
Taken together, the Court’s decision in the New London Hospital case reinforces the importance of adhering to statutory deadlines – whether for exemption applications, abatement requests, or other tax filings. With respect to exemptions, if an application is untimely filed, the Court’s decision highlights the importance of establishing evidence of “accident, mistake or misfortune” as a basis for delay at the municipal level.
The attorneys at Sulloway & Hollis are experienced with state taxation issues, from municipal applications to appeals, to the intersection of business and charitable interests. If you have questions about this decision or other matters, please give us a call to discuss.