By Paul Wood
Mayor Ravenstahl and the City of Pittsburgh are continuing on their
politically-inspired quest to strip UPMC, the parent entity for the entire UPMC
health system, of a payroll tax exemption that it does not claim, and to have it
pay taxes for employing people it doesn’t employ. The Mayor and City have always
known which UPMC entities have employees, which of those entities do business in
the City, and which of those entities claim to be exempt from the payroll tax.
All this information is filed quarterly with City Finance Department, and has
been for years. Yet they continue to waste the Court’s time, and the taxpayers’
resources, on a pointless effort to distort clear provisions of their own tax
If the City wants to challenge the tax-exempt status of UPMC, it should
challenge the organizations that operate the charitable services and have the
employees to tax. Suing a parent company with no employees is a sham that seeks
to deny the public and UPMC a fair hearing.
Virtually all of UPMC’s
tax-exempt land is owned by its hospitals and clinics where tens of thousands of
physicians, nurses, and other health professionals are employed and serve the
public. These are the patient care activities that are charitable and tax-exempt
and where the City must focus its challenge: Children’s Hospital of Pittsburgh
of UPMC; Magee-Womens Hospital of UPMC; UPMC Mercy; UPMC Presbyterian-Shadyside.
These hospital campuses sit on 51 percent of the land UPMC owns and comprise virtually
all of UPMC’s tax exempt property. These properties were tax-exempt when each
hospital joined UPMC, they continue to operate as “institutions of purely public
charity” in every sense of the phrase, and they are unquestionably tax-exempt.
If they are not, then there is no other hospital and clinic in Pittsburgh that
would qualify. UPMC already pays real estate taxes on the remaining 49 percent of the
property it owns.
If the Mayor and the City want to conduct a legally sound and expansive
review of UPMC’s tax-exempt status under the City’s payroll tax law, there is a
correct way to do it. They should start with the payroll tax filings in their
possession, identify the UPMC legal entities that claim exemption from the
payroll tax, review the entitlement of each of those entities to that exemption,
and make an administrative determination as to whether those exemptions are
Among the UPMC subsidiaries that have claimed this exemption are
Children’s Hospital, UPMC Mercy, Magee-Womens Hospital and several other
facilities fulfilling their charitable mission by delivering world-class care to
hundreds of thousands of patients every year. All of these entities directly
employ their own staffs, file all the appropriate payroll tax returns with the
City, and are clearly “institutions of purely public charity” as defined by the
City’s own tax code.
That the Mayor and the City have chosen not to do this straightforward
review reveals their doubt that any challenge to those exemptions could succeed.
Nor would such a challenge lend itself to sound bites or catchy headlines. That
clearly is why the Mayor and the City have chosen to target just the UPMC parent
holding company (which exists to hold UPMC’s debt and investments), a legal
entity they have always known has no employees.
Mayor Ravenstahl and the
City should not be allowed to bypass their own law and procedures – or simply
invent facts – by pretending that UPMC’s parent holding company employs the
thousands of individuals who actually work for separate UPMC legal entities such
as Children’s Hospital, UPMC Mercy or Magee-Womens Hospital. Nor does the IRS
Form 990 filed on behalf of the “UPMC Group,” which consolidates information for
37 separate and distinct UPMC subsidiary entities support the City’s
contentions. Sitting right beside that Form 990 on UPMC’s website is the IRS
Form 990 for UPMC’s parent holding company, which on its very first page reports
correctly that this entity has “0” employees.