Mayo Clinic, IRS to face off in federal court

A dispute between Rochester, Minn.-based Mayo Clinic and the IRS over $11.5 million in tax refunds will go before the Eighth Circuit U.S. Court of Appeals on Oct. 20, according to the Post Bulletin

The legal dispute dates back to May 2016, when Mayo filed a lawsuit against the IRS in an attempt to recover tax payments the hospital says it was wrongly forced to pay. The case centered on whether Mayo is primarily an educational organization or a healthcare system. 

Mayo contends it is an educational organization that makes patient care available as a necessary part of its educational activities. However, the IRS considers Mayo to be a parent company of a health system as its primary purpose.

Under the IRS' classification, more of the income generated by Mayo's investments is taxable.

In August 2019, a federal judge sided with Mayo Clinic. The federal government appealed the ruling. 

Both sides will present their cases remotely on Oct. 20 before a federal appellate judge. The IRS previewed its arguments in a brief filed earlier this year. 

"In our opening brief, we demonstrated that Mayo did not qualify for this narrow tax exemption because formal instruction to students is not Mayo's primary function," wrote Deputy Assistant Attorney General Richard Zuckerman and Deputy Assistant Attorney General Theodore Wu, according to the Post Bulletin. "Rather, Mayo’s primary function is providing, and managing subsidiaries that provide, healthcare to patients."

Read the full Post Bulletin article here

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