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UPMC argues it can’t pay taxes because it has no employees

According to the University of Pittsburgh Medical Center (UPMC), in their first of many hearings that will determine whether or not they keep their tax-exempt status, they do not officially have any employees.

Lawyers for UPMC have explained to Common Pleas Judge R. Stanton Wettick that for the purposes of Pittsburgh's annual wage tax, all of UPMC's thirty-seven subsidiaries each file separate forms. It was thus explained that because every employee works for a separate subsidiary, UPMC itself does not technically hire anyone, but encompasses all of its holdings under the "UPMC" title for advertising and marketing purposes. 

Judge Wettick ended the initial hearing abruptly, saying that the court could not proceed until the UPMC employee issue is uniformly addressed or an amendment of the complaint is issued as a precursor for an argument from the city that can prove otherwise. Said judge Wettick, "…if UPMC has no employees, there's nothing more I can do."

Interestingly enough, UPMC's website's "Facts" page says "UPMC is Pennsylvania's largest employer, with more than 55,000 employees." However, UPMC maintains that this is simply a marketing strategy that many other major business conglomerates have used in the past and are currently using. A UPMC spokesperson said that if the city of Pittsburgh wants to continue to challenge UPMC's tax-exempt status, then they will have to do so on a "subsidiary by subsidiary basis."

An attorney for the city of Pittsburgh said that UPMC's claim that it employs over 55,000 people as a marketing strategy will likely work against them in the hearing once things proceed. Said the attorney, "We're going to amend the complaint to address [Common Pleas Court Judge Wettick's] concern and we're confident that we can do that based on UPMC's…pronouncements that they have [more than 55,000] employees."

In addition, when UPMC made its way to the list of U.S. News & World Report's Best Hospitals, it reported that "UPMC" was a conglomeration of many separate facilities throughout the state and not that it is just a tag used for nearly 40 different subsidiaries.

The city of Pittsburgh is scheduled to file an amended complaint in about a week. The medical center will then have another week to respond. By all accounts, this looks like it will be a long, drawn out process and no future court dates have been determined.

Source: Becker's Hospital Review, "UPMC Claims it Has No Employees to Keep Tax-Exempt Status" 22 October 2013

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