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Delinquent Property Taxpayer Could Seek Large Property Tax Refund From Illinois Property Tax Appeal Board

In Shawnee Community Unit School District No. 84 v. PTAB, the Illinois appellate court allowed a power plant owner to challenge the plant’s assessed value even though its delinquent property taxes were sold at the county tax sale.

A school district intervened in an appeal of its power plant’s assessed value before the Illinois Property Tax Appeal Board (“PTAB”).  There, the school district moved to dismiss the appeal, arguing that the owner could not file a PTAB appeal because it had not paid the power plant’s property taxes.  Upholding the PTAB’s denial of the motion, the court found that state law does not require payment of contested property taxes as a prerequisite to filing a PTAB appeal, as is expressly required before filing a tax objection suit.  Rejecting the school district’s argument, the court reasoned that Property Tax Code provisions on payment under protest for tax objection suits did not apply to PTAB appeals.

The court also ruled that the PTAB had jurisdiction over the case despite a judgment ordering the sale of the power plant’s property taxes.  In the court’s view, the Property Tax Code allows simultaneous proceedings pending before the PTAB (concerning assessed value) and the circuit court (concerning delinquent property taxes).

Finally, the court found that the PTAB used a proper valuation method in its decision reducing the plant’s assessed value.  The school district argued the PTAB improperly considered a portfolio sale (sale of many properties at once), a financial analysis involving the property, and the owner’s financial analysis of the property in rendering a decision.  However, the court emphasized that the PTAB has broad discretion to weigh the credibility and sufficiency of the parties’ evidence.  Ultimately, the court concluded that there was not enough contrary evidence to overturn PTAB’s decision.

As this case illustrates, the Property Tax Code’s assessment appeal procedures can create strange incentives for taxpayers.  If a large taxpayer can withhold payment of property taxes while disputing them at the PTAB, that taxpayer could essentially coerce assessed value reductions.  The court sympathized with the school district’s argument that a large taxpayer should not be able to file PTAB appeals without paying the taxes under protest.  Nevertheless, a taxpayer can do just that under the court’s interpretation of the Property Tax Code.  It should be noted that the Illinois Supreme Court will soon hear the case and may reach a different conclusion than the appellate court.  In any event, this case highlights why school districts and other taxing bodies may wish to intervene in and contest PTAB appeals seeking large property tax assessment appeals.  If granted, such assessment reductions can erode the property tax base and potentially require highly disruptive property tax refunds from schools and municipalities.