West Windsor’s tax coffers may be more than $500,"000 richer thanks to a judicial decision that found that an organization operating in the township is not tax exempt.##M:[more]##
State Tax Court Judge Gail Menyuk ruled on November 19 that International Schools Services (ISS), which grosses some $35 million a year at its 15 Roszel Road location, was incorrect in claiming that all of its operations were tax exempt.
The 40-year-old company describes itself on its website as “providing services to overseas schools and meeting the educational needs of companies abroad… ISS plans, designs, and manages schools, and offers extensive consulting services for companies with operations around the world. In addition we provide teacher and administrator recruitment, foundations management, school and university supply procurement, financial management, publications, consulting, and other support activities to existing independent overseas schools.”
ISS has been using a portion of its Roszel Road property for purposes that are not considered tax exempt, Judge Menyuk ruled. The judge’s decision goes back two years, and would require ISS to pay $523,"000 in back taxes.
Mayor Shing-Fu Hsueh said the tax litigation against ISS was part of an initiative after his election in 2001 to ferret out companies or organizations that were improperly claiming non-profit status.
“After I took over as mayor, residents in the community let me know that there were non-profits in town that needed further screening,” says Hsueh. “This was the one we filed litigation against as a result of our investigation.” He adds that he expects that ISS will appeal the decision in the state appellate courts.
Hsueh adds that the township investigated several other non-profits, but did not find any problems strong enough to file a lawsuit. But he also wants non-profits claiming tax-exempt status to know that officials will remain vigilant. “This is something that our tax assessor is going to keep an eye on.”
In its case, the township argued that ISS was making a profit by renting out its Roszel Road building to affiliated for-profit businesses — a violation of statutes regulating tax-exempt organizations.
Judge Menyuk wrote in her decision that an organization claiming tax-exempt status must demonstrate that it is organized exclusively for the moral and mental improvement of men, women and children; that the subject property must be used for the tax-exempt purpose; and that the operation and use of its property must not be conducted for profit. The judge ruled that ISS was organized to provide funds and services to schools — not a tax-exempt purpose under state guidelines.
In 1989, when ISS applied for tax exempt status, then-township attorney Michael Hartsough issued an opinion that the property was exempt under tax statutes.
In 2003 Tax Assessor Steve Benner requested a legal review of ISS’ status. Several months later, Township Attorney Michael Herbert issued an opinion stating ISS did not qualify for tax-exempt status and an added assessment was placed on the property that year and in 2004.
The company filed appeals in tax court contesting the reversal of its tax exempt status. Judge Menyuk’s ruling was a result of the tax appeal.