Rutland Senior Living Facility Hit With $350,000 Tax Bill

VPR/ Nina Keck

Residents gather for dinner at the Gables in Rutland. The facility was recently hit with a $350,000 bill for meals tax.

(Host) In Vermont, homes for the aged are exempt from the state's nine percent rooms and meals tax.  

That's why officials from the Gables, an independent senior living facility in Rutland, say they were shocked when the state Tax Department told them just before Christmas that they owed more than $350,000 in delinquent meals taxes.  

As VPR's Nina Keck reports, the situation has stirred up debate over just what "home for the aged" means.

(Keck) By 5:30 most evenings, the dining room at the Gables is in full swing. Beef tips and lemon pepper tilapia are on the menu tonight.  

The Gables describes itself an independent living community.   To live there you have to be 55 or older. But among the 70 residents, the average age is 87.

This fall, after a routine tax audit, Gables Executive Director Jay Grimes says the Tax Department notified him that the facility should be paying the state's nine percent meals tax plus an additional one percent local meals tax.

(Grimes) "Apparently if you aren't paying meals tax and you're supposed to be paying meals tax, they can go back eight years. And so we are currently facing a tax bill of $350,000."

(Keck) Residents don't pay for each meal they eat. They pay a one-time entry fee when they move in, depending on the size of their apartment.  An additional monthly rent of just over $1,900 covers three meals a day, most utilities, housekeeping services, transportation, access to a nurse and emergency response services. 

Lorraine Healy is one of many residents concerned about an added tax.

(Healy) "We can't go out and earn money. We have to live on the money we have. And it almost looks as if the government is looking for money and they're pulling at straws to do anything that they can do to find extra money."

(Keck)  According to Vermont law, hospitals, sanatoriums, convalescent homes, nursing homes and homes for the aged are exempt from the rooms and meals tax.  

But here's where it gets tricky. The Gables is not an assisted living facility or a licensed continuing care community like Wake Robin or the Lodge at Otter Creek.

But two years ago, the Gables did receive a license to offer more hands-on care to up to 20 residents.  

Jay Grimes says seven residents receive this additional care, which allowed them to avoid moving to a neighboring assisted living facility.  

Grimes says considering that, he was shocked when the tax auditor told him she didn't think the Gables qualified as a home for the aged.

(Grimes) "'We don't think you are. We are actually looking at this.' And her exact words were, ‘We are testing the waters.'"

(Keck) But Vermont Tax Commissioner Mary Peterson says that's not how her department operates.

(Mary Peterson) "We don't do selective enforcement. We enforce the laws by doing these spot checks and audits. But we don't do selective enforcement. We don't bring test cases."

(Keck) Peterson wouldn't comment specifically on the Gables, citing privacy concerns. But she says with any audit, taxpayers have several ways to seek recourse, including appeal. With regard to the meals tax, she says, Vermont's law may need to be updated.

(Peterson) "To look at the statute, our meals statute goes back to the 1950s. And the exemptions are quite old as well - convalescent homes, home for the aged - the last time it seems to have been revisited is a specific exemption was carved out for continuing care facilities." 

(Keck) And she says was back in the 1980s.  

Laura Pelosi directs the Vermont Health Care Association, a nonprofit trade organization that represents nursing homes, residential care homes and independent living facilities, including The Gables.   

Pelosi says she and Mary Peterson have already met once about the tax issue and plan to meet again this week. At issue, says Pelosi, is how to define "home for the aged."

(Pelosi) "Which is not defined in Vermont law. As I looked at the statutory language, it seemed pretty obvious to me that the statute had not kept pace with the development of how our providers deliver services to seniors in their communities."

(Keck) Pelosi says she's not sure why the Gables was singled out for the meals tax and knows of no other senior independent living facilities in Vermont in the same situation.  

But she says the development is troubling.   Besides updating the law, Pelosi believes there's a broader policy issue at stake.  

(Pelosi) "We shouldn't set as a matter of policy - a law that requires us to tax people for eating meals in their own home. And that's essentially what's at stake here."

(Keck) Officials at the Gables say they plan to appeal the tax.  

For VPR News I'm Nina Keck in Rutland.