The U.S. government has appealed a lower court ruling that sided with Mayo Clinic in a dispute over an $11.5 million tax refund, according to Bloomberg Tax.
Rochester, Minn.-based Mayo Clinic sued the IRS in 2016, seeking a tax refund for payments the hospital said it was wrongly forced to pay. The case centered on whether Mayo Clinic is an educational organization or a medical center for tax purposes.
Under section 514 in the tax code, organizations whose main purpose is to provide education are exempt from certain unrelated business income taxes, which is the tax owed on income stemming from a trade, investment or business that isn't related to its educational purpose.
The IRS contends that Mayo Clinic should not be exempt from paying taxes on some of its income from investments because the health system "is not an organization whose particular purpose is to provide education."
Mayo Clinic has argued that it is an educational organization that "makes patient care available as a necessary and integral part of its educational activities."
The U.S. appeal was filed with the U.S. Court of Appeals for the 8th Circuit on Oct. 4.
Read the full report here.
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