Nonprofit corporations optimistic on tax reform

Darrell Todd Maurina

As the largest nonprofit corporation in Clovis, Plains Regional Medical Center might have lost millions of dollars if a state blue ribbon tax reform commission recommendation had gone differently, hospital officials say.
Hospital administrator Brian Bentley said he is “cautiously optimistic” that nonprofits won’t face taxation in the final version of new state legislation. The commission is recommending that all nonprofit organizations — except churches with receipts of more than $250,000 — file gross receipts tax filings for information, but will not be required to actually pay the tax because the current exemption from taxation would become a deduction.
PRMC’s parent corporation, Presbyterian Healthcare Services, is organized as a nonprofit corporation, but for-profit hospitals will also benefit if the proposed legislation passes — a 50 percent deduction would be expanded to 100 percent, a change that will reduce state and local revenue by $12 million.
Bentley said making nonprofit hospitals pay gross receipts taxes would have caused serious problems because even though nearly half of the bills issued by the hospital never get paid, the hospital would have been taxed on the amount billed, not the amount collected.
“It would have been tremendously difficult for us,” Bentley said. “We only collect half of our gross billings and if you look at the gross receipts taxes as a percentage of actual revenues, the tax would have been double for us.”
Bentley said a major reason for uncollected bills is that Medicare and Medicaid do not reimburse the hospital for the full cost of services rendered.
Erinn Burch, executive director of the Curry County United Way, said her organization would have faced a much smaller tax bill — perhaps a few hundred dollars — but might have suffered a significant drop in contributions by people who don’t want their charitable contributions being redirected to government coffers.
“That would have been terribly detrimental to nonprofits, donors, and people needing services,” Burch said. “We’re happy that they left nonprofits’ tax-exempt status alone.”
While Bentley said the New Mexico Hospital Association worked to express its objections to taxing nonprofits, Burch said the United Way has a policy against lobbying government officials directly. However, it did sponsor a press conference on the issue.
“People who donate to nonprofits and care about private solutions to these problems believe that individuals in the community should look out for ourselves and all problems shouldn’t be handed over to the state and nation to handle,” Burch said.
Both organizations will face one change, however: the filing fee for nonprofits has increased from $10 to $100, a change that will hike state revenue by $3 million.