Charitable Exemption Case Study

Under charitable exemptions laws, Mercy Hospital can likely be placed on the tax roll if it ceases to operate as a hospital. Hospitals normally receive tax exempt status from one of two statutes, K.S.A § 79-201b, which provides exemption for hospital purposes, and K.S.A. § 79-201, which provides exemptions for humanitarian services. The question of which law applies is not relevant as both contain the same requirement that the property is “actually and regularly used” for the purpose under the statute. The “actually and regularly used” language is common for exemptions and so even if a case is not directly under the above statutes, it is likely still precedent for our case. The Kansas Supreme Court has found that use is an important part of
Bd. of Cnty. Comm'rs of Dickinson Cnty., 211 Kan. 683, 693, 508 P.2d 911, 919 (1973). In Seventh Day, the Court held that land designated for future use did not qualify for exemption status as it was not currently being used for the charitable purpose required under the statute. Id. Modern cases have similarly addressed the issue. In re Gracious Promise Found., 42 Kan. App. 2d 180, 186-87, 211 P.3d 161, 165 (2009), review granted, cause remanded (May 19, 2010) abrogated by In re Mental Health Ass'n of Heartland, 289 Kan. 1209, 221 P.3d 580 (2009) (abrogation concerned the meaning of exclusive and should not be relevant to our case). Promise Foundation concerned a children’s home that did not have a license to care for children. Id. The Court of Appeals determined that because no actual childcare was occurring, the property could not be said to be “actually and regularly” used for the purpose under the statute and so the group lost their tax exemption status on that property. Id. The connection to a charity also does not protect the property. The Court of Appeals has held that property owned by a hospital does not receive tax exemption status just because it is owned by the hospital, there must be actual