REAL ESTATE TAX ASSESSMENTS IN ILLINOIS
by JoLynn Caroline, ATG Law Clerk

This article provides a general overview of the real estate tax assessment process in Illinois; it will explain how tax assessments are made and will examine the two ways that a taxpayer can contest a tax assessment. Finally, the article will weigh the pros and cons of contesting an assessment in the court system versus contesting an assessment through an administrative agency.

What Is an Assessment?

A real estate assessment is the fair-cash value placed on real property by the tax assessor. This value is used to determine the proper tax that will be imposed on that property (www.revenue.state.il.us/taxinformation). The fair-cash value of a property is based on its "highest and best use" as of the date of the assessment. Robert M. Sarnoff and Michael F. Baccash, Assessment of Taxable Property, Real Estate Taxation, § 2-32 (IICLE, 1997). Highest and best use does not apply to "'special use' property such as airports, railroads, and farmland." Id.

How Are Tax Assessments Made?

The General Assembly directs the election or appointment of tax assessors. These assessors are responsible for establishing the value of each parcel of property for taxation purposes. Ill Const, Art XI, § 4.

In counties with three million or more inhabitants, the county assessor is the primary assessment official. 35 ILCS 200/3-50. In townships in counties of three million or more and in counties with fewer than three million inhabitants, township assessors are ex-officio deputy assessors and are authorized to make assessments in the township in which they are elected. 35 ILCS 200/2-55, 200/3-65.

Approaches in Valuing Property

There are three standard approaches that real estate tax assessors can use to calculate the value of most property: the cost approach; the market data approach; and the income approach. Sarnoff and Baccash, § 2-32. Sarnoff and Baccash, authors of the chapter entitled "Assessment of Taxable Property," recommend that assessors use all three approaches and then correlate the data to determine the property's value.

Cost Approach

After the current replacement or reproduction cost is calculated for all structures and improvements, the depreciation from all causes is deducted and the land value is added to give the final estimate of value. Id.

Market Data Approach

The market data approach requires an estimate of the market value of a property based on the known sale prices of comparable properties. Id. at § 2-33. In the absence of sales of properties identical to the subject, it may be necessary for the sale prices of the comparables to be adjusted to reflect the value of the subject property.

Farmland is assessed based upon its ability to produce income, not on its market value. The assessor looks at the following factors: soil productivity, market conditions, production costs, and interest rates.

Income Approach

Capitalization method is defined as "a method of measuring values of realty ... by expertly estimating the gross income which property should realize, and separately the expenses reasonably required to carry it, and thus arriving at a fair estimate of net income and using a capitalization figure or factor, expertly chosen." Black's Law Dictionary, 5th Ed. This approach provides for the conversion of the net-income return produced by a property into an indication of the amount of investment that is required to produce the return through the capitalization process. Sarnoff and Baccash, at § 2-34. The formula is set forth below:

 


net income/capitalization rate = value

Id. The income approach should be used (in evaluating property for tax purposes) when the property is rented or rentable. Board of Review of Cy of Alexander v Property Tax Appeal Bd, 304 Ill App 3d 535, 710 NE2d 915, 238 Ill Dec 118 (5th D 1999).

Counties with Fewer than Three Million Inhabitants

The primary county or township assessor may revise and correct an assessment in any year. 35 ILCS 200/9-70. Notice must be given to the taxpayer as provided in §§ 12-10 and 12-30. When a county assessor views property for assessment purposes or to determine whether a revision in the assessment is required, the county assessor must give the township assessor notice by U.S. mail at least five days (but not more than 30 days) prior to the viewing. 35 ILCS 200/9-80. Additionally, the county assessor is required to give notice to the property owners by placing notices in a paper of "general circulation in the township." Id.

Counties with More than Three Million Inhabitants

The county assessor has the right to revise assessments on an annual basis. 35 ILCS 200/9-85. The assessor can also revise assessments upon receiving a written complaint from a taxpayer. Assessors may not violate a taxpayer's due process rights to have notice and receive a hearing prior to any reassessment action. Exchange Nat Bank of Chicago v Cullerton, 20 Ill App 3d 370, 314 NE2d 271 (1st D 1974).

Notice

Notice and an opportunity to be heard must precede the increase of an assessment. People ex rel. Bracher v Vail, 296 Ill 61, 129 NE 494 (Ill 1920). A county assessor may revise an assessment up until the time that the assessment is verified. 35 ILCS 200/9-85. An assessor must append an affidavit to the assessment book after revisions are made. Mid-Continental Realty Corp v Korzen, 40 Ill App 3d 133, 351 NE2d 376 (1st D 1976). Notice and an opportunity for the taxpayer to be heard must precede final assessment. Cullerton, 20 Ill App 3d 370, 314 NE2d 271. An assessment without notice and opportunity to be heard is illegal and void.

How Are Tax Assessments Contested?

Taxpayers may seek relief by filing a complaint with the Property Tax Appeal Board (PTAB), or by filing a complaint with the circuit court in the county in which some or all of the assessed property is located. 35 ILCS 200/8-40. Both procedures will be described below.

Property Tax Appeal Board

The Property Tax Appeal Board (PTAB) is required to review an assessment upon receiving a written complaint that any property is over-assessed or under-assessed. 35 ILCS 200/16-55. The PTAB must correct the assessment as appears to be just but must not assess a value at a higher percentage of the fair-cash value of other property in the assessment district.

When Can a Taxpayer File a Complaint?

In counties with less than 150,000 inhabitants, a complaint to affect an assessment for the current year must be filed on or before the tenth day of August. 35 ILCS 200/16-55. If the assessment books containing the assessment in question are not filed with the board by the tenth day of July, then the complaint must be filed on or before 30 calendar days after the date of publication of the assessment. 35 ILCS 200/16-50. In counties with more than 150,000 inhabitants but less than three million inhabitants, the complaint must be filed on or before the tenth day of September. 35 ILCS 200/16-55. If the assessment books containing the assessment in question are not filed with the board by the tenth day of August, then the complaint must be filed on or before 30 calendar days after the date of publication of the assessment. 35 ILCS 200/16-50.

In counties with three million or more inhabitants, the board must publish notices that specify the date and location at which complaints may be filed and considered for revision and correction. 35 ILCS 200/16-110. Taxpayers have at least 20 days after the date the notice is published to file complaints.

Filing a Complaint

In counties with more than three million inhabitants, any taxpayer can file a complaint. 35 ILCS 200/16-115. A taxing district that has an interest in the assessment may also file a complaint with the board of review. Id. All complaints must be in writing, identify and describe the property, and must be signed by the complaining taxpayer or his/her attorney. All complaints must be in proper form, that is, in compliance with existing rules and laws. The complaint must then be filed with the board of review.

Hearing

As previously mentioned, a hearing on a complaint must not be held until the taxpayer affected by the assessment has been notified and has had an opportunity to be heard. 35 ILCS 200/16-125. The board is required to hear or pass on the complaints listed on the docket. Afterward, the board is required to transmit final actions to the county assessor.

The complainant must overcome the presumption that the property assessment is just. Id. Presumptions that the tax assessments were just and that the assessor acted honestly and lawfully can be overcome only by clear and explicit testimony. People ex rel McDonough v Goldberg, 354 Ill 423, 188 NE 428 (Ill 1933). Once the complainant meets this burden, the burden shifts to the assessor to produce evidence to justify the assessment. People v IBM Corp, 89 Ill 2d 287, 432 NE2d 867, 59 Ill Dec 923 (Ill 1982).

Appealing to the PTAB

The PTAB is required to set up an informal procedure to determine the correct assessment of the property that is the subject of an appeal. 35 ILCS 200/16-180. All appeals must be considered de novo. The PTAB must provide forms for appeal to the Boards of Review or Appeals (name of the Board varies by location). In turn, these boards must provide these forms to each taxpayer or taxing body entitled to appeal a decision. 35 ILCS 200/16-65. The PTAB clerk is required to mail a copy of the appellant's petition to the board of review or board of appeals (whose decision is being appealed).

The Board is required to make a decision in each appeal or case appealed to it. 35 ILCS 200/16-185. The decision is based upon equity and the weight of evidence (not upon constructive fraud) and will be binding on the appellant and government officials.

PTAB decisions can be appealed to the circuit court of the county where the property is located, except when a taxpayer seeks a reduction in assessment of more than $300,000. 35 ILCS 200/16-185. This will be discussed in further detail in the next segment of this article.

Appealing the PTAB Decision in Court

A taxpayer may also appeal the PTAB decision by filing a complaint with the circuit court of the county in which the property is located. 35 ILCS 200/8-40. The county circuit court (in which the assessed property is located) may review all final administrative decisions pursuant to Illinois' Administrative Review Procedure. Id. The Administrative Review Law provides in pertinent part:

Every action to review a final administrative decision shall be commenced by the filing of a complaint and the issuance of summons within 35 days from the date that a copy of the decision sought to be reviewed was served upon the party affected by the decision, except that:

(2) in other actions for review of a final administrative decision, a complaint filed within the time limit established by this Section may be amended to add an . . . agent, or member of an administrative agency, board, committee, or government entity, who acted in an official capacity as a party of record to the administrative proceeding, if the administrative agency, board, committee, or government entity is a party to the administrative review action. If the director or agency head, in his or her official capacity, is a party to the administrative review, a complaint filed within the time limit established by this Section may be amended to add the administrative agency, board, committee, or government entity. 735 ILCS 5/3-103 (emphasis added).

The court must not allow a complaint if an administrative remedy was available from the board of appeals or board of review, unless that remedy was exhausted before the filing of the complaint. 35 ILCS 200/23-10.

Contesting A Tax Assessment Through The Courts

A taxpayer may contest an assessment by filing a complaint in court rather than with the PTAB. Unlike the PTAB, the court does not have the authority to increase an assessment. Nina H. Tamburo, The Illinois Property Tax System: An Overview, Loyola Consumer L Rev 186, 188 (1988). Consequently, the court must deny relief when an assessment reduction is not justified.

At What Time Can a Taxpayer File a Complaint?

A complaint must be filed 75 days after the first penalty date of the final installment tax bill for the year in question. 35 ILCS 200/23-10. Section 200/23-5 provides that:

... if any person desires to object to all or any part of a property tax for any year ... he or she shall pay all of the tax due within 60 days from the first penalty date of the final installment of taxes for that year ... [when] a tax objection complaint is filed in compliance with section 23-10, 100% of the taxes shall be deemed paid under protest without the filing of a separate letter of protest with the county collector. 35 ILCS 200/23-5.

If the complaint can be filed without payment under Section 23-5, it must be filed prior to the entry of judgment under Section 21-75 that provides:

The taxes upon property, together with all penalties, interests and costs that may accrue thereon, shall be a prior and first lien on the property, superior to all other liens and encumbrances, from and including the first day of January in the year in which the taxes are levied until the taxes are paid or until the property is sold under this Code. 35 ILCS 200/21-75.

In counties with less than three million inhabitants, the taxpayer must file three copies of the complaint with the clerk of the circuit court. Within ten days after the complaint is filed, the clerk must deliver one copy to the State's Attorney and one copy to the county clerk. Upon receipt of the complaint and any subsequent amendments to the complaint, the State's Attorney must notify the custodian of receipt of the complaint and amendments and notify the custodian and county clerk of the date, time, and location of the hearing no later than four days before the hearing. A custodian is a duly elected or appointed custodian of funds for each tax-levying unit whose tax monies will likely be affected by the taxpayer's complaint. 35 ILCS 200/23-10.

Hearing

The court is required to hear and determine all objections specified to the taxes, assessments, or levies in question. 35 ILCS 200/23-15(b)(1). There is a rebuttable presumption that assessments are correct and legal. 35 ILCS 200/23-15(b)(2). The taxpayer has the burden of rebutting this presumption by presenting clear and convincing evidence.

Appeal

Taxpayers can appeal decisions of the circuit court through the traditional court system. Likewise, PTAB decisions can be appealed to the circuit court in the county where the property is located, unless a taxpayer is seeking a reduction of more than $300,000. 35 ILCS 200/16-195. If a request for reduction exceeds $300,000, the complaint should be reviewed by the appellate court in the district where the property is located. Id.

Choosing PTAB versus Court

In a recent article in the Elliott & Associates Law Report, attorney Joanne Elliott discussed the pros and cons of choosing between filing a complaint with the PTAB versus filing a complaint with a circuit court. Joanne Elliott, Now, More Than Ever, it is Important to Hire an Attorney to Contest Your Taxes, Elliott & Associates Law Report, Spring/Summer 2000.

Presently, PTAB cases are being resolved faster than circuit court cases because PTAB cases are filed earlier than circuit court cases. Elliott reports that while PTAB cases must be filed within 30 days after the decision, court cases are usually filed anywhere from six to ten months post-decision. However, recent trends show that PTAB cases are increasing in a volume that will likely lead to a slower turnover rate.

The burden of proof in PTAB cases is lower than the burden imposed on circuit court cases. In PTAB proceedings, clear and explicit testimony must overcome the presumption that an assessment was lawfully and justly imposed. Goldberg, 354 Ill 423, 188 NE 428. In circuit court proceedings, the complainant has the burden of rebutting this presumption by presenting clear and convincing evidence. 35 ILCS 200/23-15(b)(2). The burden of proof is a significant factor if the case proceeds to a trial and verdict. James W. Chipman, Executive Director of State of Illinois PTAB, noted that the burden of proof for PTAB proceedings is a "mere preponderance of the evidence" (with regard to challenging the fair market value). James W. Chipman, Practice and Procedure Before the Property Tax Appeal Board, § 7-12 (IICLE, 1997). If the taxpayer wants to challenge the lack of uniformity or inequality of assessment, courts have ruled that the appealing party must provide "clear and convincing evidence." Kankakee Cy Bd of Review v Property Tax Appeal Board, 131 Ill 2d 1, 544 NE2d 762, 136 Ill Dec 76 (Ill 1989).

Since the PTAB considers the assessment de novo, it does not presume that the assessment established by the local board of review was correct. Chipman, at § 7-12. Courts presume that assessments are correct and legal. 35 ILCS 200/23-15(b)(2). The taxpayer has the burden of rebutting this presumption by presenting clear and convincing evidence.

Published rules and precedent govern both PTAB and circuit courts. Depending on the case, the PTAB precedent might favor a certain position in opposition of how the same case would be decided in the court system and vice versa. A taxpayer will likely want to select the forum in which the precedent is in her favor.

As mentioned earlier, a taxpayer must pay real estate taxes for the year in dispute before her case can be appealed to the circuit court. However, the PTAB does not require that a taxpayer pay taxes before appealing. Elliott points out that if a taxpayer is unable to pay a high tax, but wants to contest the assessment, using the PTAB procedure would enable the taxpayer to contest the tax without having to pay.

Taxing districts can intervene in PTAB cases; settlements cannot be made without the intervenor's consent. Circuit court cases are not subject to taxing district intervention. Elliott recommends that if it appears that intervention is likely to take place, the taxpayer should appeal the case in court.

Conclusion

In Illinois, local assessors set the values for parcels of property in their districts by using the cost approach, the market data approach, or the income approach (or some other hybrid approach). If a taxpayer feels that the assessment is too high, too low, or is not uniform with the assessments placed on other similar parcels of property, the taxpayer can contest the assessment. The Property Tax Appeal Board is required to review the assessment of the local assessor. If the taxpayer is not satisfied by the PTAB's decision, he or she can seek administrative review in the circuit court. The circuit court may also review the local assessor's assessment; however, the court requires that the complainant first exhaust all administrative remedies prior to filing suit in the circuit court.

The PTAB proceeding differs from a circuit court proceeding in the following ways: length of time for filing; prerequisites to filing; length of time in resolution; appealing party's burden of proof; rules and precedent; and standard of review and presumptions. A taxpayer should examine each of these factors in deciding which procedure (PTAB or circuit court) best suits his or her needs.

© ATG atgc0103vol25

 

Print this page