Amid the COVID-19 pandemic, taxpayers and property tax officials are using new forums and new procedures to pursue and process property tax claims.

Taxpayers are appealing their real estate values as the pandemic roils global real estate markets. Brooks Brothers, Hertz, J.C. Penney’s, J. Crew, and other companies declared bankruptcy and are seeking to sell off properties or renegotiate their leases with landlords. Many small bars, restaurants, and retail stores have closed their doors or reduced staff numbers, which impedes economic growth generally. All this turmoil has affected real estate owners’ ability to generate income from their properties. In response, taxpayers are seeking relief from their property taxes by contesting the taxable value of their properties.

The Seventh Circuit Court of Appeals (which has jurisdiction over Illinois) recently issued a noteworthy opinion in A.F. Moore & Associates v. Pappas, allowing a challenge to the constitutionality of Cook County’s assessment practices to go forward in federal court rather than the traditional state court forum. In an opinion written by now-U.S. Supreme Court Justice Amy Coney Barrett, the Seventh Circuit ruled that state courts did not provide a sufficient procedure for the taxpayers to raise their constitutional challenges. The court reasoned that the Illinois Property Tax Code’s prohibition on challenging the assessors’ methodology prevented the taxpayers from raising their constitutional claim in state court. The taxpayers were claiming that Cook County systematically overvalued their properties compared to other properties, in violation of the federal equal protection clause. As a result, the federal district court will now hear the merits of the taxpayers’ claims.

As for procedural changes, some counties have been finding new ways to notify taxing districts of assessment appeals in lieu of letter mailings. For example, the Cook County Board of Review is now emailing notices to taxing districts using the email contacts on file with the Cook County Clerk. Taxing districts may contact the Cook County Clerk to change the email contacts that receive these notices.

At the appeal level, the Illinois Property Tax Appeal Board (“PTAB”) resumed notifying taxing districts of pending appeals concerning the 2019 assessed value of properties across Illinois. School districts have the right to intervene in these PTAB appeals by filing a request to intervene within 60 days of receipt of the notice of the appeal from the county boards of review. In the coming months, the PTAB will resume holding hearings on the merits of assessment appeals. These hearings had been suspended since March 2020. For the foreseeable future, the PTAB will hold hearings remotely.

Property tax reduction claims due to the impact of the pandemic are gaining a foothold. Even though it remains exceptional for a property tax challenge to proceed in federal court, the COVID-19 pandemic is spurring taxpayers to seek new ways of reducing their property tax liabilities. At the same time, assessing officials are using new procedures to manage these appeals. School boards and other taxing districts should expect appeals to continue and prepare for procedures to evolve as the COVID-19 pandemic continues.

Contact Antonio Senagore in our Corporate practice group with questions about property tax assessment appeals.

Source: A.F. Moore & Associates, Inc. v. Pappas, 948 F.3d 889 (7th Cir. 2020)