Some residents of the Princeton area claim that the university is violating the terms of their tax-exempt status and if you read the report below, you’ll see they make a pretty good case.

Jon Offredo of reports.

Lawsuit challenging Princeton University’s tax-exempt status won’t be dismissed

Princeton – A lawsuit that argues Princeton University violates the provisions of its tax-exempt status survived a university-led attempt to throw the case out Thursday.

Plaintiffs in the case argue that, because Princeton is earning hundreds of millions of dollars in patent royalty income and is distributing some of that money to faculty, the school is deeply involved in commercial enterprise and isn’t entitled to its tax exemptions.

The suit also takes aim at campus buildings that host extensive commercial activity, such as the Frist Campus Center and McCarter Theatre, which sells tickets to the general public for many events and performances.

Public interest lawyer Bruce Afran, who represents a handful of Princeton residents in the case, said yesterday that tax court judge Vito Bianco said the case had merit, and the potential precedent it could set was so far-reaching that the case was too important to be dismissed.

“This is the first time this type of challenge has been filed in any state,” Afran said.
“This is an extremely important case. People have been watching this.”

A university official yesterday said that questions raised by the lawsuit would prompt the school to reconsider whether certain buildings should be considered tax-exempt, but that despite the school’s lucrative revenues it remained well within the bounds of a tax-exempt, nonprofit institution.

“We are very confident that the tax court is not going to eliminate tax exemption,” university Vice President Bob Durkee said.

“I think if there are going to be any discussions, it would be about whether or not there are any specific buildings to make an adjustment to. And if there are any at all, it will be quite modest,” he said.

The suit alleges the university has violated its exemption status since 2005, the year it started sharing patent royalties with faculty. It challenges the exempt status of 19 buildings on campus, saying that they have non-academic or commercial uses.