The city of Scranton and the Scranton School District are challenging the tax-exempt statuses of four nonprofit entities in the city.
The city and SSD on Friday jointly filed legal actions called “reverse exemption appeals” against: Scranton Liederkranz Co., Milk Saving Starving Children, Simrell Park Association and 20th Ward Social Athletic Club.
Twentieth Ward Social and Athletic Club on 2028 Pittston Ave. on Monday, July 27, 2026. (JASON ARDAN / STAFF PHOTOGRAPHER)
Filed with the Lackawanna County Board of Assessment Appeals, the challenges claim the entities do not qualify for tax exemptions.
The appeals stem from the city’s first tax-exemption-verification review launched in December of 2023. This initiative aims to review and verify the tax-exempt status of nonprofit and government-owned properties by conducting what’s known as a HUP test. At that time, in 2023, the city had 1,622 tax-exempt properties that accounted for nearly 37%, or about $220 million, of Scranton’s $598 million total assessed property value. Nearly 6% of Scranton’s 27,000-plus parcels were off the tax rolls.
The HUP test, which gets its name from a landmark 1985 state Supreme Court decision in Hospital Utilization Project v. Commonwealth, established five prongs an organization must meet to qualify as a tax-exempt charity under the state Constitution. The test holds that to be considered a purely public charity, the entity seeking a tax exemption must advance a charitable purpose, donate or render gratuitously a substantial portion of its services, benefit a substantial and indefinite class of people who are legitimate subjects of charity, relieve the government of some of its burden and operate entirely free from profit motive.
According to city Business Administrator Eileen Cipriani, the county assessment board over the past year or so twice issued letters to all of the nonprofits in the city to verify their tax-exempt statuses. Many responded and many did not. The four getting challenged have not responded and attorneys “felt these are the (first) ones for the city and school district to appeal,” Cipriani said. Similar actions might follow against others who have not responded, she said.
Reverse-appeal details
The challenges filed Friday included one against Scranton Liederkranz and two each against the others. Here’s a look at each challenge:
Scranton Liederkranz Co.
The challenge applies to the Scranton Liederkranz property at 508 Lackawanna Ave., currently assessed at $472,040.
As for the reason the property should not be tax exempt, the challenge says the organization is on an IRS “auto-revocation list” for revocation of its 501(c)(7) status, the exemption type for social and recreational clubs, and notes a revocation date of May 15, 2016.
The organization’s use also “does not meet (the) HUP test,” the city and school district contend.
20th Ward Social Athletic Club
The city and school district are challenging the tax-exempt status of the 20th Ward Social Athletic Club property at 2028 Pittston Ave., assessed at $662,010, and an apparently undeveloped property at Birney Avenue and Gibbons Street assessed $424,850, per the separate filings.
Both filings claim the organization’s use does not meet the HUP test.
Milk Saving Starving Children
The taxing bodies are challenging the exemption of two properties, a restaurant property at 801 N. Washington Ave., assessed at $233,520, and an apparently vacant parcel at 400 Gibson St., assessed at $70,250, separate filings show.
The organization recently lost its IRS 501(c)(3) exemption and its use does not meet the HUP test, according to the filings.
Simrell Park Association
The city and school district are challenging the exemption of a pair of properties, 627 Madison Ave. and 629-631 Madison Ave., respectively. The former is assessed at $47,720; the latter is assessed at $59,010, per the filings.
As in other cases, officials allege the organization’s use does not meet the HUP test.
What’s next?
Each challenge is signed by Cipriani and Scranton School District Business Manager Patrick Laffey. Attorney Joseph O’Brien represents the city, and attorney Joseph Joyce represents the school district.
The appeals board would schedule a hearing in each case and may act based upon evidence presented, which might include corporate charters, IRS and state exemption forms and letters of intent for uses of the properties.
Efforts to reach the four entities were unsuccessful.
Staff writer Jeff Horvath contributed to this report.