HCSC-Laundry v. United States

450 U.S. 1 (1981)

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HCSC-Laundry v. United States

United States Supreme Court
450 U.S. 1 (1981)

Facts

HCSC-Laundry (HCSC) (plaintiff) was a Pennsylvania nonprofit corporation organized to operate and maintain a laundry and linen-supply program for public and nonprofit hospitals and health facilities. HCSC was formed after the Lehigh Valley Health Planning Council determined that a shared, nonprofit, off-premises laundry would best serve the needs of its member hospitals in terms of quality of service and economies of scale. HCSC provided services to 15 nonprofit hospitals and an ambulance service, each of which was an exempt entity for purposes of § 501(c)(3) of the Internal Revenue Code (code). The Internal Revenue Service (IRS) (defendant) denied HCSC’s application for exemption under § 501(c)(3), finding that HCSC was a cooperative hospital-service organization and that § 501(e) of the code was the only provision under which such an organization could qualify as tax-exempt. Because § 501(e)(1)(A) did not mention laundry service, the IRS determined that HCSC was not entitled to exemption. HCSC paid its taxes and filed a claim for refund. When the IRS took no action on the claim, HCSC filed suit, and the district court ruled in favor of HCSC. The circuit court reversed, and the United States Supreme Court granted certiorari.

Rule of Law

Issue

Holding and Reasoning (Per curiam)

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