An Act To Establish Minimum Standards of Eligibility for the Property Tax Exemption for Benevolent and Charitable Institutions
Maine Legislature, Session 121, LD 0855
Committee: Taxation
Sponsors: CRESSEY
Amends: 36 MRSA §652

Legislative Document 
No. 855 
H.P.632 
House of Representatives, February 20, 2003 
An Act To Establish Minimum Standards of Eligibility for the 
Property Tax Exemption for Benevolent and Charitable Institutions 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative CRESSEY of Baldwin. 
Printed on recycled paper 
Jrl~/J?~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA §652, sub-§I, <J[A, as amended by PL 2001, c. 
596, Pt. B, §23 and affected by §25, is further amended to read: 
A. 
The real estate and personal property owned and occupied 
or used solely for their own purposes by benevolent and 
charitable institutions incorporated by this State. 
Such an 
institution may not be deprived of the right of exemption by 
reason of the source from which its funds are derived or by 
reason of limitation in the classes of persons for whose 
benefit saeh those funds are applied. 
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(1) 
To qualify for the tax exemption provided by this 
paragraph, 
an 
institution must 
donate 
or 
render 
gratuitously a 
substantial portion of its services. 
This subparagraph is satisfied if the institution 
benefits the community by actually providing any of the 
following: 
(a) 
Goods or services to all who seek them 
without regard to their ability to pay for what 
they receive if all of the following apply: 
(i) 
The institution has a written policy to 
that effect: 
(ii) 
The 
institution 
has 
published 
and 
posted that policy in a reasonable manner: and 
(iii) The institution provides uncompensated 
goods or services equal to at least 75'l& of 
the institution's net operating income and at 
least 3'l& of the institution's total operating 
expenses: 
Page I-LR1730(1) 
• 
(b) 
Goods and services for fees that are based 
upon the recipient's ability to pay for those 
goods and services. 
The institution meets the 
requirements of this division if the municipality 
implements a written policy and written schedule 
of fees in which: 
0) 
The institution consistently applies a 
formula 
to 
all 
individuals 
requesting 
consideration of reduced fees that is in part 
based on individual or family income: 
(ii) 
At least 
20~ of 
the 
individuals 
receiving 
goods 
or 
services 
from 
the 
institution do not pay a fee or pay a fee 
that is substantially lower than the cost of 
the 
goods 
or 
services 
provided 
by 
the 
institution: 
(iii) 
At 
least 
10~ of 
the 
individuals 
receiving 
goods 
or 
services 
from 
the 
institution, 
not 
including the 
individuals 
described in subdivision (ii), receive a 
reduction in fees of at least 10~ of the cost 
of the goods or services provided to them: and 
(iv) Individuals receiving goods or services 
from the institution do not pay a fee that is 
equal to or greater than the cost of the 
goods 
or 
services 
provided 
to 
those 
individuals or the goods or services provided 
to the individuals described in subdivision 
(ii) are comparable in quality and quantity 
to the goods or services provided to those 
individuals who pay a fee that is equal to or 
greater 
than 
the 
cost 
of 
the 
goods 
or 
services provided to them: 
(c) 
Wholly gratuitous goods or services to at 
least 
5~ of those rece1v1ng goods or services 
similar to those goods or services provided in 
division (b) from the institution: 
(d) 
Uncompensated goods or services that in the 
aggregate 
are 
equal 
to at least 
5~ of the 
institution's 
costs 
of 
providing 
goods 
or 
services: or 
(e) 
Goods or services at no fee or reduced fees 
to nonprofit agencies or goods and services to 
individuals eligible for government programs if 
any of the following applies: 
(i) 
The 
nonprofit agency is exempt 
from 
income taxation pursuant to Section 50l( c) (3) 
of the Code and is licensed by the Department 
of Human Services as a nonprofit nursing 
home, 
nonprofit 
boarding 
home, 
nonprofit 
boarding care facility or nonprofit child 
care center pursuant to Title 22, 
chapter 
1664; 
Oil 
The nonprofit agency receives 75'\. or 
more 
of its gross 
operating 
revenue 
from 
grants 
or 
fee-for-service 
payments 
by 
government agencies and the aggregate amount 
of 
the 
fee-for-service 
payments 
from 
government agencies does not exceed 95'\. of 
the nonprofit agency's costs of providing 
goods or services to the individuals for whom 
the fee-for-service payments are made; or 
(iii) The nonprofit agency provides goods or 
services 
to 
individuals 
with 
mental 
retardation, to individuals who need mental 
health services or to the guardian of such an 
individual or members of such an individual's 
family in support of those goods or services 
or 
to 
individuals 
who 
are 
dependent, 
neglected or delinquent children, as long as 
the institution performs duties that would 
otherwise be the responsibility of government 
and the nonprofit agency is restricted in its 
ability to retain revenue over expenses or 
voluntary contributions by anyone of the 
following statutes or regulations relating to 
conditions of participation for intermediate 
care facilities for the mentally retarded or 
by contractual limitations with any state 
agency: 
the Social Security Act, 
Sections 
1905(d) 
and 19l5(c); 
Code of Federal 
Regulations, 440.150 relating to intermediate 
care facilities services; or 
Code of 
Federal Regulations, Part 483, Subchapter I. 
For purposes of this division, "nonprofit agency" 
means an entity exempt from taxation under Section 
50l(c)(3) of the Code. 
• 
(2) 
An institution may elect to average the applicable 
data for its 5 most recently completed fiscal years for 
the purposes of calculating any formula to meet any 
quantitative standard in subparagraph (1). 
( 3) 
As 
used in this paragraph, unless the context 
otherwise indicates, the following terms have the 
following meanings. 
(a) 
"Net operating income" means the amount of 
funds 
remaining after all operating expenses 
related to the prov1s1on of goods or services 
associated 
with 
an 
institution's 
charitable 
purpose are deducted from payments received for 
providing those goods or services as determined in 
accordance 
with 
generally 
accepted 
accounting 
principles applicable to the institution. 
(b) 
"Total operating expenses" means the costs 
related to the provision of goods or services 
associated 
with 
an 
institution's 
charitable 
purpose as determined in accordance with generally 
accepted accounting principles applicable to the 
institution. 
(c) 
"Uncompensated goods or services" means the 
following: 
(i) 
The full cost of all goods and services 
provided by 
an institution for 
which the 
institution 
has 
not 
received 
monetary 
compensation or the difference between the 
full cost and any lesser fee received for the 
goods and services, including the cost of the 
goods or services provided to individuals 
unable to pay: 
(ii) 
The difference between the full cost of 
education and research programs provided by 
or participated in by an institution and the 
payments made to the institution to support 
the education and research programs: 
(iii) 
The difference between the full cost 
of providing the goods or services and the 
payment 
made 
to 
an institution under 
any 
government 
program, 
including 
goods 
or 
services provided to individuals covered by 
Medicare or Medicaid; 
(iv) 
The difference between the full cost of 
the community services that an institution 
provides or participates in and the payment 
made 
to 
the 
institution to 
support 
those 
community services: 
(v) 
The reasonable value of any money, 
property, 
goods 
or 
services 
donated 
by 
a 
primary donor to an institution or the 
reasonable value of the net donation made by 
a secondary donor to a primary donor. 
As 
used 
in 
this 
subdivision, 
"net 
donation" 
means, in the case of a donation of money, 
property, identical goods or services made by 
a secondary donor, the difference between the 
value of the donation made by the secondary 
donor and the value of the donation made by 
the primary donor, as long as the value is 
positive; "primary donor" means an entity 
that makes 
a 
donation of money, 
property, 
goods or services to an institution of purely 
public charity; and "secondary donor" means 
p'n entity that receives a donation of any 
money, 
property, 
goods or services 
from 
a 
primary donor and then makes a donation back 
to that primary 
donor 
within 
years 
of 
having received such a donation; 
(vi) 
The 
reasonable value of volunteer 
assistance 
donated 
by 
individuals 
who 
are 
involved or assist in the provision of goods 
or 
services 
by 
an 
institution. 
The 
reasonable value of volunteer assistance, 
computed on an hourly basis, may not exceed 
the 
statewide 
average 
weekly 
wage 
as 
calculated by the Department of Labor, Bureau 
of Labor Standards; and 
(vii) The cost of goods or services provided 
by an institution licensed by the Department 
of Human Services to individuals who are 
unable to pay, 
as 
long as 
reasonable 
and 
customary collection efforts have been made 
by the institution. 
SUMMARY 
This bill provides a property tax exemption to a nonprofit 
benevolent and charitable institution only if it donates or 
renders gratuitously a substantial portion of its services. 
The 
charitable organization can meet that standard in one of 5 ways. 
The 5 alternative ways to meet the standard are: 
l. The institution must provide goods and services to all 
who seek them without regard to ability to pay; 
2. 
The institution must provide goods and services for fees 
that are based on the recipients' ability to pay; 
3. 
The institution must provide wholly gratuitous goods and 
services 
to least 
5~ of 
those 
receiving similar goods 
and 
services from the institution; 
4. 
The ins ti tution mus t 
provide uncompensated goods or 
services that in the aggregate are equal to at least 5~ of the 
institution's cost of providing goods or services; or 
5. 
The institution must provide goods or services at no fee 
or a reduced fee to. nonprofit agencies or individuals eligible 
for government programs.