Potential lawsuit between Princeton residents and Princeton University

Princeton, NewJersey residents have filed a lawsuit against Princeton University claimingthat the school is not eligible for tax-exempt status due to the school’sincome from royalties and commercial ventures.

PrincetonUniversity is one of the wealthiest schools in the United States. While theaverage school’s fiscal endowment is somewhere around $313.2 million, Princeton’sis $16.9 billion. Last year alone Princeton University made $127 milliondollars from patent licensing profits. Additionally, the school “has distributed $118.5million in royalty profits to faculty since 2005.”

The fact thatresidents who share their hometown with nonprofits are often angered by aparticular nonprofit organization’s tax-exempt status is definitely not unheardof. There have been several occasions where communities experiencing financialhardship have turned to local tax-exempt nonprofits and have asked them tocontribute in ways the tax code doesn’t require.

Princetonresidents pay “at least one-third more in taxes” because of the school’s taxexemption. While PrincetonUniversity did pay $7.7 million in taxes last year, if not for its tax-exemptstatus the school’s annual property tax bill would be $28 million. However, theschool also made a $2.48 million voluntary contribution.

What are thebest arguments for Princeton residents? For Princeton University?

http://observer.com/2013/07/the-tax-man-cometh-residents-go-after-princetons-nonprofit-status/

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