News and analysis
February 17, 2015

Tax Judge Says Suit on Princeton Exemption Can Go Forward

A New Jersey Tax Court judge has denied a motion by Princeton University to dismiss a lawsuit challenging the institution’s property-tax exemption, Bloomberg writes. Princeton said it would appeal Thursday's decision on a case brought in 2013 by four Princeton, N.J., residents who contend the money the university earns from royalties on commercial endeavors like pharmaceutical patents and shares with faculty render it ineligible for the tax break.

Judge Vito Bianco rejected Princeton's claim that the case should hinge on whether earnings profits were the university's "dominant motive." Bruce Afran, a lawyer for the plaintiffs, said the judge is "making it clear that the test for losing tax-exemption status is whether these institutions engage in significant commercial conduct." Princeton general counsel Ramona Romero said the residents' arguments "potentially jeopardize" hospitals, charities, and houses of worship as well as private universities.