Goodwin associate Carrie Garber Siegrist and partner Susan Abbott explain that the U.S. Court of Appeals for the Eighth Circuit’s decision in Mayo Clinic v. US spotlights the tension between the IRS’s narrower interpretation of “educational organization” and the court’s fact-intensive approach. The court’s endorsement in July of Mayo’s integrated model — linking education, patient care, and research — has practical implications for academic medical centers and others navigating unrelated business income tax (UBIT) concerns and perhaps exemption eligibility. This decision, closely watched across the sector, may signal a shift in how courts approach certain UBIT rules under the Internal Revenue Code and possibly even the operational test under section 501(c)(3). Mayo sought a UBIT refund of more than $11.5 million. The IRS argued for a narrow reading, focusing on formal instruction as the primary function, while Mayo and the courts emphasized a broader, fact-driven analysis.
Read the Bloomberg Law article to learn what the Mayo decision means for academic medical centers and other organizations with complex, integrated missions.