Appellate Court Reaffirms Exhaustion of Remedies Doctrine in Assessment Cases

by Franczek Radelet P.C.

[author: Ares Dalianis and Scott Metcalf]

Tax objection complaints can be brought in any Illinois circuit court to challenge the taxes, assessments, or levies on a parcel of real property. However, where a taxpayer is challenging the assessed value of its property, the taxpayer must first exhaust its administrative remedies by appealing the assessment at the county board of review. If a taxpayer fails to exhaust its administrative remedies at the board of review, then a circuit court has no jurisdiction over the tax objection complaint. A recent Illinois Appellate Court decision from Fulton County reaffirmed this long standing requirement and dismissed a valuation objection.

In Baker v. Harper, the taxpayers purchased 164 acres of a 225-acre parcel of farmland, in other words 72.6% of the parcel. The local assessing officials created a new property index number (PIN) for the portion of the parcel purchased by the taxpayers. The next year, the taxpayers received a reassessment notice for the new PIN stating that the parcel would no longer be assessed as farmland. The assessed value of the new PIN was listed as $165,250, and the prior year’s assessment was listed as $0. As a result, the property taxes on the new PIN were $15,372, substantially more than the taxes would have been if the new PIN had been assessed as farmland.

The taxpayers went immediately to the Circuit Court, claiming the property should be assessed as farmland like the original parcel, which would dramatically reduce the amount of taxes they owed. The County Treasurer, as the named defendant in all tax objection complaints, moved to dismiss the complaint for failure to exhaust administrative remedies. The Circuit Court denied the motion to dismiss and granted the taxpayers’ motion for summary judgment.

On appeal, the Third District Appellate Court ruled against the taxpayers. The taxpayers argued that they did not have to exhaust their administrative remedies because the reassessment notice was defective. The alleged defect in the reassessment notice was the prior year’s assessment for the newly created PIN being listed as $0. According to the taxpayers, the prior year’s assessment should have been stated as 72.6% of the assessment of the old, 225-acre parcel or simply as “N/A.”

The Appellate Court ruled that there was no error in the notice provided to the taxpayers and therefore no exception to the exhaustion of remedies requirement. In reaching this conclusion the Court relied on the section of the Property Tax Code requiring the exhaustion of administrative remedies (§23-10), the section stating that failure to provide a required notice does not affect the validity of any assessment (§24-25), and the section stating that an error or informality that does not create substantial injustice does not affect the validity of an assessment (§21-185). It then went on to reject the case law cited by the taxpayers. Taxpayers’ case, from 1954, created an exception to the exhaustion of remedies requirement for the personal property tax where there was a complete failure to provide a reassessment notice. In the present case, notice was not only provided, but the Court found the notice properly listed the prior year assessment for the new PIN as $0.

The exhaustion of remedies requirement under the Property Tax Code is beneficial to those seeking to defend the current assessments of properties. The prerequisite of filing a complaint at the board of review prevents taxpayers from going directly to circuit court where a refund may be granted and instead forces taxpayers to pursue assessment challenges first in a forum that resolves disputes before the extension of taxes.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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