RANCHO CORDOVA, Calif., July 16 /PRNewswire/ -- VSP Vision Care has added former United States Solicitor General Ken Starr to its legal team as it petitions for a writ of certiorari to The Supreme Court of the United States for a final hearing on its federal tax-exempt status.
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Ken Starr joins the VSP appellate legal team that includes senior litigation partner Douglas C. Ross of Davis Wright Tremaine LLP, who has represented VSP in this tax matter since 2003, and Thomas A. Fessler, VSP's Vice President and General Counsel.
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"This case is really about determining what guidelines the IRS uses to define what constitutes a tax exempt not-for-profit organization," states Ken Starr. "VSP had a tax-exemption for more than 40 years, has not changed their business philosophy or focus on the community and yet lost their tax-exempt status. In the end, we are simply asking the Supreme Court to recognize the significant community benefit VSP offers to more than 55 million Americans."
In 1960, VSP was granted exemption from its obligation to pay federal income taxes pursuant to Internal Revenue Code § 501(c)4.
In 2003, based on an examination conducted in 1999, the IRS issued a final adverse determination letter, revoking tax-exempt status for VSP's California Corporation effective as of Jan. 1, 2003.
VSP California filed for and paid income taxes owed for 2003 and then filed suit in federal court for a refund of that amount. VSP California has continued to do business as a not-for-profit and has been paying federal income taxes since then.
On Dec. 12, 2005, Judge Lawrence K. Karlton granted the United States' motion for summary judgment, deciding that "VSP is not operated 'exclusively for the promotion of social welfare' as provided for in 501(c)4."
VSP appealed to the United States Court of Appeals for the Ninth Circuit. Appellate argument was heard on Dec. 5, 2007. The District Court decision was affirmed on Jan. 30, 2008.
The memorandum disposition issued by the Ninth Circuit stated: "While VSP offers some public benefits, they are not enough for us to conclude that VSP is primarily engaged in promoting the common good and general welfare of the community."
On March 13, 2008, VSP filed a motion for rehearing/reconsideration en banc which was denied by the Ninth Circuit. VSP subsequently received approval from its Board to seek review of this matter in the Supreme Court of the United States.
"Because we are a not-for-profit, surplus revenues are reinvested into our charity programs designed to help less fortunate Americans receive eyecare," states VSP president and CEO Rob Lynch. "Funds are also used to deploy new technologies that reduce administrative costs, expand access to eyecare in the communities we serve and offer continuing education to the patients and doctors in our national network. We are hopeful that The Supreme Court of the United States will recognize the importance of this case, not only to VSP, but to the delivery of healthcare in America."
About VSP
VSP's family of companies includes VSP Vision Care, the only not-for-profit managed vision care company in the United States serving 55 million members; VSP Labs, industry leaders in new technologies, production processes, service and logistics; Altair, the only eyewear company that exclusively supports private-practice eye doctors; and Eyefinity, offering private practices innovative solutions to improve overall practice management and the patient experience.
Since 1997, VSP has provided more than 470,000 low-income, uninsured children with free eyecare. Through relationships with the American Diabetes
