- The federal government says the Mayo Clinic isn’t entitled to collect $ 11.5 million in tax refunds and is seeking an appeal after Mayo’s win in a federal district court in Minnesota in August.
- At issue is whether the Rochester, Minn.-based nonprofit is an educational organization and, as such, entitled to collect certain tax refunds.
- The federal judge in Minnesota ruled in Mayo’s favor and said the government exceeded its authority in denying the refund. The government formally appealed that ruling late last week.
Mayo Clinic operates its own medical school and maintains a regular curriculum, faculty and body of students and that’s enough for it to qualify as an educational organization and the refunds it seeks, the judge ruled in August.
It applied a test from a U.S. Treasury Department regulation that led the IRS to conclude Mayo’s “primary function” was not “formal instruction.” But the judge said the IRS exceeded its statutory authority when it applied the primary function standard to block the refund.
The government appealed to the U.S. Court of Appeals for the Eighth Circuit, continuing the legal battle that started with Mayo filing suit in 2016.
Mayo Clinic is a widely recognized provider across America and is ranked as one of the best hospitals in the country. The health system, which also has facilities in Arizona and Florida, nearly tripled its profits in the second quarter of this year to almost $ 500 million and reported $ 3.4 billion in revenue. Officials said the growth was driven by strong returns on investments and growing volume.
Mayo Clinic did not respond to Healthcare Dive’s request for comment.