A board of review decision can also be appealed directly to a circuit court. It’s an option that taxpayers often overlook!

By James W. Chipman

Boards of review don’t have the final say about property tax assessments, however they’re a necessary stop in the appeal process. Taxpayers who are unhappy with their board decision have two options: appeal to the state Property Tax Appeal Board (PTAB) as described in my Aug. 24, Sept. 12 and Nov. 27 blogs; or, file a tax objection complaint in the circuit court. You cannot file appeals in both venues. The good news is that taxpayers who miss the 30-day filing deadline for taking an appeal to the PTAB still have time to pursue the tax objection remedy.

Filing a tax objection complaint, the lesser known of the two alternatives, involves a formalized legal process that’s full of conditions, requirements and deadlines that make it a potential minefield for inexperienced taxpayers or attorneys. While tax objection cases are more common in Cook County than elsewhere in the state, here’s what a taxpayer can expect if they choose this remedy.

Before going to court

Prior to filing a tax objection complaint, the taxpayer must pay the entire tax due on the property* on time and have filed an appeal with the board of review at the appropriate time**. Once these requirements are met and a complaint is filed, 100% of the taxes are considered paid under protest.

The court process

The process begins when a complaint is filed in the circuit court of the county where the property is located. The complaint must specify the reasons why the assessment is excessive. Any number of factual and legal arguments can be made, but in most cases, it’s about whether the fair market value of the property is accurate. The county collector or treasurer is named as a defendant but is not required to file a response to the complaint. The state’s attorney, who acts as legal counsel for the county, generally represents the collector. A tax objection case is subject to rules of practice and procedure, including discovery. This means each party can subpoena documents and witnesses.

Taxpayers face an uphill battle. When a case goes to trial, there’s a rebuttable presumption that the property assessment is correct and legal and taxpayers must overcome this presumed correctness by clear and convincing evidence.*** That’s the highest burden of proof in a civil matter. A judge sitting without a jury hears the case de novo, or anew, and will make one of the following rulings:

• Confirm the assessment.

• Grant a reduction and order a refund, in which case the taxpayer is entitled to interest.

• Or, in certain instances, increase an assessment if it’s felt the evidence tendered by the taxing body is superior to that filed by the taxpayer.

After the court’s ruling

The taxpayer or the collector can appeal an adverse ruling through the court system just like in any other civil matter.**** However, with any court appeal, there are strict time limits and procedural rules that govern the process.

Taxpayers have choices when it comes to appealing their property tax assessments. Going to court is one worth considering as it can actually result in a faster decision being made than if the case had been appealed to the PTAB.

If you want to learn whether filing a tax objection complaint may be your best alternative, please contact Jim at JWChipman@GCTSpringfield.law or 217.280.5518.

Sources:
*35 ILCS 200/23-5 (The process is different in Cook County – see 35 ILCS 200/23-5 & 23-10)
**35 ILCS 200/23-10
***35 ILCS 200/23-15(b)(2)
****35 ILCS 200/23-15(c)

By James W. Chipman

There’s a remedy for correcting errors or mistakes in a property tax assessment even after the deadline for appealing to the board of review has passed.

Mistakes happen. If a mistake occurs in the property tax process, it could be costly if not corrected. Fortunately, some errors are fixable -- even those that may have occurred in a previous year or years -- thanks to what is known as a Certificate of Error, or in property tax parlance, a C of E. When an assessment error is discovered, taxpayers can seek relief by filing a C of E with local assessing officials. However, be advised that the granting of a C of E by an assessing authority is discretionary, not mandatory.

DEFINING WHAT IS WRONG TO MAKE IT RIGHT

A Certificate of Error is a written acknowledgement by either the county supervisor of assessments (chief county assessment officer) or the board of review that something is wrong with your assessment. The C of E law can be used to correct problems such as mathematical errors, incorrect descriptions of property, duplicate assessments, and improvements that have been damaged or destroyed. It also can apply to cases where an exemption for which a property was eligible, but the exemption was not applied to the tax bill.

There are some instances that cannot be remedied by a C of E, including “errors of judgment as to the valuation of the property.”* Ordinary valuation disputes about market value or lack of uniformity can only be resolved by filing an appeal with the board or review and the state Property Tax Appeal Board (PTAB).

C OF E PROCESS AND PROCEDURE

In Illinois counties outside of Cook County, the C of E process is initiated whenever the supervisor of assessments or the board of review discovers an error, or upon the taxpayer’s initiative. A C of E requires the approval of the supervisor of assessments and a majority of the board of review. It is then forwarded to the county clerk and treasurer.

Interestingly, a taxpayer isn’t entitled to notice and an opportunity to be heard. In fact, local assessing officials can fix a mistake without the taxpayer’s knowledge or input. Should the county treasurer refund money because of a C of E, the taxpayer is entitled to 0.5% interest per month.**

LIMITATIONS AND THE NEED FOR AN ANNUAL REVIEW

Generally, a C of E can be issued “at any time before judgment or order of sale is entered” in a proceeding to collect unpaid taxes on a property.*** The term “judgment” refers to the annual tax sale that typically takes place within 60 days after the second installment of taxes is due.

While local assessing officials must act before the annual application for judgment, a 1977 Illinois Attorney General opinion added a further limitation finding that the period in which a C of E may be issued expires when a taxpayer files an appeal with the PTAB or when the PTAB renders a decision.****

Like it or not, the property tax process is prone to mistakes. That’s why an annual review of your property assessment and tax bill for accuracy is time well spent.

If you find an error or mistake on either of your documents, contact Jim at JWChipman@GCTSpringfield.law or 217.280.5518 for advice on whether a C of E is the best way to remedy your situation.

Sources:
*35 ILCS 200/14-20 (The certificate of error process differs in Cook County – see 35 ILCS 200/14-10 & 200/14-15)
**35 ILCS 200/20-178
***35 ILCS 200/14-20
****IL Atty. Gen. Op. No. S-1307 (1977)

By James W. Chipman

Wind energy devices have proliferated across the central Illinois landscape in recent years. Get wind of how the assessment process works by talking to a property tax attorney.

Illinois is home to both the Windy City and a very flat, windy prairie. When the state’s first wind turbine went online in rural Lee County in 2003, no one could have guessed that 15 years later over 2,600 of these devices would be operational and account for 6.2% of all in-state electrical production.*

Wind turbines convert the wind’s kinetic energy into electrical energy for commercial sale. Most turbines are located in rural settings where land is rented from the property owner, usually a farmer. The company that installed the turbine pays the taxes, and the farmer receives an annual royalty. One individual “wind farm” typically occupies about an acre of land.

TWISTING IN THE WIND

Because wind turbines have both real and personal property components, assessment criteria varied from county to county based on a jurisdiction’s treatment of classifying property prior to 1979. (Real and personal property classification is still unsettled law.) Inconsistent and confusing assessments were frequently the subject of appeals before boards of review and the state’s Property Tax Appeal Board.** Eventually, it became clear that the wind farm valuation process needed a legislative solution.

WINDS OF CHANGE

A 2007 change in Illinois law made the state even more attractive to wind developers when a uniform system of tax assessment was finally adopted.*** The “market value” of a turbine is $360,000 per megawatt of capacity adjusted annually for inflation by a trending factor. An amount for physical depreciation is then deducted from the “trended real property cost” to determine the assessed value [($360,000 x trending factor) – depreciation = assessed value]. Wind turbine operators must have a surveyor prepare a plat that includes a metes and bounds description of the area surrounding the turbine over which the owner exercises exclusive control.

Although wind turbine assessments are now computed annually under the state formula, assessments can be challenged if the turbine is affected by what appraisers call “functional and external obsolescence.” These two forms of depreciation differ from physical depreciation, which is deterioration of property due to age and wear. Functional obsolescence occurs when conditions exist within the property—such as an outdated design feature—that cannot be easily changed, as opposed to external or economic obsolescence, which is due to negative influences outside the property and are usually not fixable.

Don’t throw caution to the wind. If you have questions about a wind farm assessment, call a property tax attorney for answers.

Learn more about wind farm assessments by contacting Jim at JWChipman@GCTSpringfield.law or 217.280.5518.

Sources:
*“Wind Energy in Illinois” U.S. Wind Energy State Facts. American Wind Energy Association (2017)
**Property Tax Appeal Board decision (#06-2736.001-C-2: Pike Co.), Feb. 23, 2010
***35 ILCS 200/10-600 et seq.

By James W. Chipman

Unfavorable PTAB rulings often lead to an uphill battle in court, but working with an experienced property tax attorney can ensure you are well-positioned for a positive outcome.

When taking a case to the Property Tax Appeal Board (PTAB), it’s only natural to hope for the best. However, not everyone receives the result they desire. Fortunately, any party dissatisfied with a PTAB decision can appeal it.*

The PTAB is an independent state agency that hears appeals from boards of reviews on the valuation of assessed property. Appeals are heard “de novo,” which means a fresh start. A new administrative record is made at the PTAB that includes all of the evidence and testimony offered by the taxpayer and the board of review whose decision was appealed. The PTAB operates informally with relaxed rules of evidence and practice.**

FOOL’S ERRAND?

A word to the wise is in order for anyone who wishes to appeal their PTAB decision—courts apply strict standards of review to the decision of an administrative agency such as the PTAB.

The court’s only job on appeal is to look at the administrative record and see if any errors were made by the PTAB. The appealing party has the burden of convincing the court the decision was wrong. No new or additional evidence can be submitted by anyone. There is a rebuttable presumption that the PTAB’s decision was correct, and unless an opposite result is clearly evident to the court, the decision will be upheld.

Courts won’t reassess witness credibility, reweigh evidence or make an independent determination of facts. PTAB legal interpretations aren’t binding on a court, but they are given great weight and deference.

Conventional wisdom may tell you that overturning a PTAB decision is an impossible feat, but the truth is, they are reversed more often than you think. Sometimes, the best offense is having the best defense.

AN OUNCE OF PREVENTION

Some taxpayers are frustrated after losing their PTAB appeal because they felt like they had the best evidence and made a good presentation at the hearing.

PTAB decisions are based on the evidence and testimony that was made part of the record. Thus, creating a complete record that accurately reflects arguments is critical—everything filed and discussed at a hearing becomes a permanent part of the record that follows you through the court review process, including the reasons why you lost the appeal. Therefore, building a defensible record is the single most important thing you can do to prepare for a PTAB or future court appeal.

There are no guarantees in the property tax appeal process. However, if you want to increase your chances of success, consult a property tax attorney who will work with you from start to finish. They’ll ensure that even if you get a negative result from the PTAB, you’ve got a good record upon which to pursue a court challenge.

Learn more about what follows the Property Tax Appeal Board by contacting Jim at JWChipman@GCTSpringfield.law or 217.280.5518.

Sources:
*35 ILCS 200/16-195
**35 ILCS 200/16-180

By James W. Chipman

Beginning on January 1, 2019, every property assessment in Illinois outside of Cook County will be fair game for assessors. Here’s what you need to know.

Illinois law requires a general assessment of all property in the state to be made every four years, except in Cook County.*

In less than three months, assessing officials will begin the painstaking process of systemically reviewing each property in their jurisdiction. A general assessment, also known as a “reassessment” or a “quadrennial assessment,” helps ensure that properties are assessed at or near a required level of assessment, which in Illinois is 33 1/3% of market value. Keeping assessments up to date equalizes property values and helps eliminate unfair assessments or “sticker shock” that taxpayers can experience when assessments are not periodically reviewed.

During general assessment years, assessors must value a large number of properties in a relatively short period of time. That’s why they often rely on “trending” and “mass appraisal” models to assist them. Trending is applying a positive or negative factor to a designated group of properties to reflect changes in market conditions over a period of time, usually the three intervening years between general assessments. Thus, a 10% trending factor would indicate that property values have increased by 10%. Mass appraisal involves developing values for a large group of properties by using current data that is based on one of three accepted approaches to determining value—cost, market or income.

Relying on these rigid valuation models can often lead to errors in valuing property because of their inability to recognize differences in the physical characteristics of properties in a given area. Additionally, use of either model doesn’t mean that all the properties in a jurisdiction will be uniformly and equitably assessed.

WHAT TO EXPECT IN 2019

1. Assessors are required to “actually view” each property in a general assessment year.** This may involve simply driving by your property to document any exterior changes, or making a formal request to take a look inside. If you receive such a request, you have options.
2. Mailers may be sent asking you to correct or update your property’s information. Accurate information on your property record card is critical and pointing out errors to the assessor can work in your favor.
3. Finally, you’re entitled to notice. Every four years when property is reassessed outside of Cook County, a complete list of assessments must be published in a local newspaper of general circulation. Publication also serves notice on taxpayers that they have 30 days to challenge their assessments. Taxpayers who don’t file within this time frame must wait until the following year.

History tells us taxpayers should expect assessment increases in a general assessment year based on market changes that took place three years earlier. Making sure your assessment is fair and equitable in the first year of a general assessment can eliminate the need for appeals in the next three years. If that sounds appealing, talk to a property tax attorney once your 2019 assessment is published because the 30-day clock will be ticking.

For more information on how the quadrennial event could impact you and your assessment, contact Jim at JWChipman@GCTSpringfield.law or 217.280.5518.

Sources:
*35 ILCS 200/9-215 & 9-225 (Property in Cook County is assessed triennially under 35 ILCS 200/9-220)
**35 ILCS 200/9-155

By James W. Chipman

Although the Illinois tax on personal property was eliminated nearly four decades ago, the approach to classifying real and personal property remains controversial.

Before Illinois’ personal property tax was abolished, both real and personal property were assessed and taxed the same. Nobody cared if property was called “real” or “personal.” But when the tax on individuals was eliminated in 1970 and its corporate counterpart was phased out nine years later through a constitutional amendment, classifying property as real or personal suddenly became a big deal. Since then, only real property has been taxed.

BEATING A DEAD HORSE

The personal property tax, however, has died a very slow death. After its elimination, the courts and Property Tax Appeal Board (PTAB), a quasi-judicial state agency that reviews local assessment disputes, began hearing multi-million dollar appeals where businesses claimed assessors were arbitrarily switching property classifications from personal to real to replace lost tax revenue generated by the old tax. The practice still occurs today.

A 40-year track record of these appeals suggests a subtle erosion of the personal property exemption and raises the question of whether the tax really was eradicated. Throughout its history, the tax was regarded by many as burdensome, unfair and even scandalous. Personal property returns were often not filed or grossly understated, and little effort was made by assessing officials to verify figures or ensure that all taxable property was accounted for.

Before the personal property tax on corporations was repealed, lawmakers had to come up with a replacement tax. They chose to impose a corporate income tax surcharge and an invested capital tax on regulated public utilities that would be state collected and, it was thought, have a far greater annual growth rate than its predecessor tax.

STATUS QUO UNIFORMITY

The replacement tax, however, only solved part of the problem. Because there was no statewide classification scheme when the personal property tax was eliminated, the legislature decided to preserve or freeze the pre-1979 assessment practices of assessors in each county over time to prevent widespread reclassification of property. Essentially, each county’s 1979 classifications of property as real or personal would control current and future classifications.* This preservation of the status quo meant there would be uniform treatment of property within a county, but not across county lines, meaning it was legal to have different classifications for the same type of property from one county to the next.

During the past four decades, classification disputes have focused mainly on process machinery and equipment, which were once listed among 36 classes of personal property in an old state law and assessor manuals.

Litigation over reclassification began shortly after the tax was eliminated in 1979 and continues to this day. Many of the lawsuits were decided based on agreements made by the taxpayer and the assessor** or on the pre-1979 assessment policy of the disputed property in a county.***

BE VIGILANT

Today, some assessors may occasionally engage in selective reclassification when a new business locates in their jurisdiction or machinery and equipment are upgraded in an existing manufacturing plant. Whether acting in good faith or not, assessors must interpret and apply the law, however confusing. As time passes, historical classification practices from the 1970s are difficult to ascertain as participants change and business records are destroyed.

As assessments are reviewed and updated every four years, businesses should be on guard for signs of reclassification, particularly in 2019 when the entire state will experience a reassessment. If your business’s property assessment rises significantly in just one year, call a property tax attorney to help you pinpoint the cause and advise you on how best to proceed.

Sources:
*35 ILCS 200/24-5
**Central Illinois Light Co. v. Johnson, 84 Ill.2d 275 (1981)
***Commonwealth Edison Co. v. Property Tax Appeal Board, 219 Ill.App.3d 550 (2d Dist. 1991), appeal denied; Oregon Community Unit School District #220 v. Property Tax Appeal Board, 285 Ill.App.3d 170 (2d Dist. 1996)

By James W. Chipman

Any corporate taxpayer contemplating an appeal should call a property tax attorney sooner rather than later.

A corporation is considered a person under the law, albeit an artificial one. It sounds like an odd concept, but it’s been around for a while. Odder yet is that corporate personal rights exist and are expanding. Pro se or self-representation is a right that’s as old as our Constitution. In the property tax appeal process, an individual can always represent themselves, but does the same rule apply to a corporation? It depends.

UNSETTLED LAW

Illinois has a multilevel property tax appeal system. The taxpayer must file locally with the county board of review. They also have the option to go the state Property Tax Appeal Board (PTAB). These two administrative bodies decide most of the appeals that are filed statewide each year. Because administrative agencies are considered quasi-judicial bodies and not courts, they aren’t bound by strict rules of procedure. They can write their own rules of practice and enforce them as long as they comply with the law.

The PTAB hears appeals from the boards of review and is the final arbitrator in the administrative process before court. The PTAB bans corporations, limited liability companies (LLCs) and other similar entities from appearing on their own behalf at any stage of a board appeal.* That rule was put into effect based on the assertion that the representation of anyone other than themselves constitutes the practice of law that can only be done by a licensed attorney. There’s also the matter of conflicting interests—attorney representation of a corporation ensures that a company’s legal interests come first and don’t conflict with the interests of a director, officer or agent.

While many boards of review have taken the PTAB’s lead and required a corporate taxpayer to be represented by an attorney, the rules vary from county to county. Some boards allow a corporation to be represented by other parties but may require the company to sign an authorization form. Other boards don’t even address representation in their rules.

The question of whether corporate representation by an attorney is required in an administrative hearing was considered by the Illinois Supreme Court just last year. The case involved a limited liability corporation represented by a non-attorney in the City of Chicago’s department of hearings over what constitutes due process in an administrative hearing. The court declined to answer the representation question, finding it wasn’t necessary for a resolution of the case.**

THE SAFE HARBOR APPROACH

Deciding to appeal your company’s property tax assessment can be a complicated undertaking that requires a great deal of time and expertise. Companies shouldn’t attempt to represent themselves at any board of review hearing, even if the practice is allowed.

It’s always wise to engage the services of a property tax attorney, whether or not it’s required, because while some mistakes can be fixed, others can’t. Proceeding on your own could mean missing a deadline, not knowing what evidence to submit or lacking a detailed understanding of the rules of practice and procedure. These elements are often challenging for any person—natural or artificial—to navigate, thus having an experienced property tax attorney on your side is the way to go.

Sources:
*ILL. ADMIN. CODE tit. 86, §1910.70 (c)
**Stone Street Partners, LLC, v. The City of Chicago Department of Administrative Hearings, 2017 IL 117720

By James W. Chipman

While the appeal process now includes more transparency, understanding the best way to proceed and succeed often requires the assistance of a trusted property tax attorney.

Each county in Illinois has a three-member panel called the board of review, which acts as an intermediary between township assessors and taxpayers. Boards hear and decide assessment complaints after giving taxpayers an opportunity to be heard. They also make rules so that the appeal process is orderly and fair.

In the past, however, the process might have seemed anything but fair to property owners or attorneys who showed up for a board hearing only to learn that a taxing district had intervened or that the assessor had evidence supporting his value in the appeal. It’s no wonder this practice became widely known as “hearing by ambush.” Fortunately, things have changed.

FAIR IS FAIR

Public Act 99-0098, which took effect on January 1, 2016, allows taxpayers to take some comfort in knowing that everyone is now playing by the same set of rules. PA 99-0098 requires taxing districts to file a notice to intervene at least five days prior to a hearing. In addition, if the board of review requires the taxpayer to submit evidence in advance, any evidence supporting the assessor’s or intervenor’s value must be submitted at least five days before the hearing to the board and the property owner or their attorney.

PA 99-0098 also applies the mailbox rule to boards of review. This is a rule of contract law that says an offer is considered accepted at the time the acceptance is mailed. Under PA 99-0098, documents sent by US mail or another delivery service are considered filed as of the postmark date or the shipper’s tracking label or in the case of email, the date the correspondence is sent. This law, however, does not apply in Cook County.

FURTHER ROOM FOR IMPROVEMENT

While PA 99-0098 makes the process more fair and balanced, taxpayers still face additional challenges. Boards of review aren’t obligated to correct an assessment even if the complaining taxpayer has proven their case. All they are required to do is review an assessment and change it “as appears to be just.”* Taxpayers that are denied relief must go one step further and either file a lawsuit in court or appeal to the state Property Tax Appeal Board (PTAB)—but you can’t do both.

A property tax attorney who is skilled in the appeal process can explain the pros and cons of going either to court or the PTAB. They’ll also have valuable insight about the filing deadlines, burdens of proof, expected turnaround times and the types of evidence that are likely to succeed in each venue.

* Source: 35 ILCS 200/16-55 (a)