Nothing at the local level that qualifies WMC tax-exempt nor state level

After reviewing the Commissioner of the Revenue's report.  There is no formal exemption from local taxes by either designation or classification in the City of Winchester with regards to Winchester Medical Center nor at the state level.

The commonwealth has never had a "community benefit" standard in place for a not-for-profit hospital to abide by, but rather followed those previous 1969 broad and vague guidelines.

Federal Tax-Exemption Criteria for Nonprofit Hospitals:

IRS's community benefit standard to qualify for tax-exempt status allows nonprofit hospitals broad latitude to determine the services and activities that constitute community benefit. Furthermore, state community benefit requirements that hospitals must meet in order to qualify for state tax-exempt or nonprofit status vary substantially in scope and detail.

In the 1969 revenue ruling that established the community benefit standard, IRS recognized five factors that would support a nonprofit hospital's tax-exempt status. These five factors were :

(1) The operation of an emergency room open to all members of the community without regard to ability to pay

(2) A governance board composed of community members

(3) The use of surplus revenue for facilities improvement, patient care, and medical training, education, and research

(4) The provision of inpatient hospital care for all persons in the community able to pay, including those covered by Medicare and Medicaid

(5) An open medical staff with privileges available to all qualifying physicians.

IRS further stated that tax-exempt status would be determined based on the facts and circumstances of each case, and that neither the absence of particular factors set forth in the 1969 revenue ruling nor the presence of other factors would be necessarily conclusive. 

Nonprofit hospitals that qualify for tax-exempt status are exempt from federal income taxation, have access to bond financing that generates tax-free interest earnings for the bondholder--allowing these hospitals to borrow funds at a lower cost than nonexempt entities--and are eligible to receive contributions that are tax deductible for the donors.

In addition, these hospitals may also be exempt under state law from state and local income, property, and sales taxes, which in some cases are of a greater value than the federal income tax exemption.
(Information was obtained from The Government Accountability Office report on hospital community benefit, page 11 and 12 of actual report but page 16 and 17 of the PDF file).

Case Where State Law Superseded Federal Law

City of Richmond v. Richmond Memorial Hospital. In City of Richmond v. Richmond Memorial Hospital, 202 Va. 86, 116 S.E. 2d 79 (1960), the issue was whether the right to exemption “depends solely upon the extent to which free service is rendered.” The court rejected that standard and concluded that the exemption depends not upon the number of patients who are treated free of charge, but upon the nature of the institutions and the purpose of the operations. The constitution of Virginia did not require that services be rendered for free as the basis for exemption.