VSP Loses Battle to Keep Tax-Exempt Status

VSP Vision Care, the Rancho Cordova eye benefits company, has lost  its ongoing battle to retain its tax-exempt status Monday when the U.S. Supreme Court refused to even hear the case. The company vowed to reapply for the exemption as soon as possible.

VSP General Counsel Thomas Fessler said the benefits provider was disappointed in the decision, but that the ruling would not affect its operations. “We will continue to operate as a not-for-profit organization with no service disruptions in vision care or coverage for our members, clients and doctors,” Fessler said. He also added that VSP’s charitable efforts would continue as well.

VSP will reapply to the IRS for tax-exempt status, said spokesman Pat McNeil, adding that the benefits provider has paid all of its taxes since the 2003 IRS ruling. The previous decision was from a 2003 Internal Revenue Service ruling that VSP must pay taxes even though it is a not-for-profit organization because it didn’t “operate exclusively for the promotion of social welfare.”

Earlier in the year, VSP appealed a court decision that upheld the IRS ruling and hired Kenneth Starr, the former Whitewater prosecutor and current Pepperdine Law School dean, to plead its case. Starr petitioned the high court in November.

Organizations including Prevent Blindness America and the National Association of School Nurses also lent support, filing briefs with the high court asking it to reconsider the 2003 ruling. VSP  cited its 40 years of tax-exempt status and said most of its money goes to optometrists and charities.

VSP’s charitable programs include Mobile Eyes,  a mobile clinic that provided nearly $2 million last year in eye care and education to low- income, uninsured and under insured people

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Posted by Michelle Ventress on Jan 14 2009. Filed under Business. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.