Warren Urges IRS to Crack Down on Real Estate Investment Trusts (REITs) Squeezing Health Care and Hotel Industries and Stretching Tax Rules

Press Release

“Under the tax code, REITs can take advantage of lucrative tax breaks – including avoiding the 21 percent corporate income tax and qualifying for the 20 percent pass-through deduction for investors. REITs are supposed to be passive investment opportunities for smaller-scale investors, but REITs in the health care and hotel industries may be violating these tax rules.

In Massachusetts, Medical Properties Trust or MPT – a REIT that bought hospital properties from Steward Health Care in 2016, saddling the hospitals with expensive lease agreements that ultimately drove Steward into bankruptcy – has a complex investment history with Steward that raises questions about whether it has met IRS requirements regarding the limitations on a REIT’s ownership of a tenant or an operator. Meanwhile, taxable REIT subsidiaries, or TRSs have negotiated agreements with hotel operators that give the TRS the right to exert significant control over labor terms, including vetoing collective bargaining agreements negotiated with hotel workers and participating in negotiations with hotel employee labor unions.

As the IRS continues to identify massive corporations and businesses that may be violating tax law, I urge you to increase enforcement scrutiny of REITs, especially large health and hospitality REITs that may be illegally claiming significant tax breaks while meddling in the operations of their tenants. Decades-long underfunding of the IRS may have let bad actors feel safe to claim large REIT tax breaks while violating REIT rules, but such tax cheating should not be allowed to continue."

Source