Did a private nonprofit corporation operating a leased public hospital inherit the hospital service district's governmental sales-tax exclusion?

Plain-English summary

The private nonprofit hospital operator's purchases were taxable because leasing and operating a public hospital did not turn the nonprofit into the hospital service district or another exempt governmental body.

The public district itself was excluded from the sales-tax definition of “person,” but that status did not transfer through the lease.

Common questions

Q: Did nonprofit status alone create the governmental exclusion?

A: No.

Q: Did operating district-owned hospital facilities make the nonprofit an instrumentality?

A: No, under the ruling.

Q: What was the result for the nonprofit's purchases?

A: They were subject to state sales or use tax.

Citations and references

• La. R.S. 46:1051 et seq. — hospital service district authority
• La. R.S. 47:301(8)(c) — governmental exclusion from “person”
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 01-009

Original ruling text

Revenue Ruling
No. 01- 009
October 8, 2001
Sales and Use Tax
Private Nonprofit Corporation Leasing Hospital Service District Facilities not
Entitled to Sales Tax Exemption on Purchases as Governmental Entity
The purpose of this Revenue Ruling is to discuss the state sales and use taxability of purchases
made by a private nonprofit corporation that leases hospital buildings, improvements,
appurtenances, furnishings, fixtures, equipment, and supplies from a public hospital service
district, and that will operate the hospital for the period of time specified in the lease agreement
with the hospital service district.
The hospital service district, the lessor, is created by the parish governing authority under the
authority of Louisiana Revised Statute Title 46, Section 1051 et seq. While the hospital service
district itself, as a public entity, is excluded from the definition of “person”, and thus from the
payment of sales and use tax, by La. R.S. 47:301(8)(c), the exclusion under La. R.S. 47:301(8)(c)
is limited to “this state, any parish, city and parish, municipality, district, or other political
subdivision thereof, or any agency, board, commission, or instrumentality of this state or its
political subdivisions.” Because a private nonprofit corporation is not classified under any of the
groups listed in La. R.S. 47:301(8)(c), it is not eligible for exclusion from the payment of sales
and use tax, nor does it enjoy an exclusion by virtue of its operation of a hospital that the
corporation has leased from a public entity. Accordingly, purchases by the private nonprofit
corporation are subject to the state sales or use tax.

Cynthia Bridges
Secretary

By:

Raymond E. Tangney
Senior Policy Consultant
Policy Services Division

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