City budget crises force rethink of revenue sources; tax-exempt organizations are likely targets

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While budgetary shortfalls amplified by the lingering recession and sharp decline in property tax collections drag on, tax-exempt organizations and state nonprofits continue to find themselves in the crosshairs as state and local governments look for new revenue sources to pay for basic services, including police, fire, and snow removal. In Boston today, a mayoral task force has issued a report proposing modifications to the city’s payments in lieu of taxes (“PILOTs”) program in order to raise additional revenue from hospitals, universities, museums, and other area nonprofits.

The proposal, which is already being met with stiff public resistance from local colleges, calls for all area nonprofits to contribute 25% of the property tax that would be collectible if the organizations were not exempt. Credits would be available, in amounts up to 50% of the assessed PILOT payments, for the quantifiable community benefits offered by participating organizations and for real estate taxes paid on properties that would ordinarily qualify for a tax exemption based on use.

Source: pwc

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