U.S. Supreme Court Refuses to Hear Case of Whether Eye Benefits Giant Should Retain Its Tax-Exempt Status

The Sacramento Bee reports that VSP Vision Care, the Rancho Cordova, CA eye benefits giant, lost its battle to retain its tax-exempt status Monday when the U.S. Supreme Court refused to hear the case. The company vowed to reapply for the exemption.

VSP General Counsel Thomas Fessler said Monday 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, adding that VSP’s charitable efforts would continue.

VSP will reapply to the IRS “as soon as possible” for tax-exempt status, said spokesman Pat McNeil, adding that the benefits provider has paid all of its taxes since the 2003 IRS ruling.

At issue was a 2003 Internal Revenue Service ruling that VSP must pay taxes even though it is a not-for-profit organization, concluding that it didn’t “operate exclusively for the promotion of social welfare.” The $3.3 billion benefits provider serves more than 55 million people in the United States and Canada.

Earlier this year, VSP appealed an appellate court decision that upheld the IRS ruling and hired Kenneth Starr 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 had cited its 40 years of tax-exempt status and said most of its money goes to optometrists and charities in its fight to retain its status. Officials have said that allowing the IRS ruling to stand would adversely impact a $1 trillion not-for-profit industry. VSP’s charitable programs include a mobile clinic that provided nearly $2 million last year in eye care and education to low- income, uninsured and underinsured people.

SS