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TAX REFORM LEGISLATION UPHELD BY SUPREME COURT

In July 1995, Governor Edgar signed into law Public Act 89-126 which amended Section 23-15 of the Illinois Property Tax Code (35 ILCS 200/23-15) by abolishing the age old doctrine of "constructive fraud", and replacing it with the "clear and convincing" evidentiary standard of proof. Under constructive fraud, a Taxpayer challenging the tax assessment placed upon its property through the filing of a "Specific Objection" action in the circuit court could only prevail upon a showing that the assessment was the result of an actual or constructive "fraud" committed by the assessing official, an extremely difficult contention to prove. However, the amended Section 23-15 specifically does away with the constructive fraud requirement and instead provides that a Taxpayer may challenge a real property tax assessment by filing a "Tax Objection Complaint" in the Circuit Court, and while the assessment is still presumed correct, a Taxpayer can rebut this presumption and prevail if it can be shown that the assessment is incorrect or illegal through clear and convincing evidence. 35 ILCS 200/23-15 (b)(2).

On February 6, 1997, Cook County Circuit Court Judge Michael Murphy declared the amended Section 23-15 unconstitutional, in that it violated the separation of powers provision of the Illinois Constitution (Ill. Const. Art II Sec. 1). Judge Murphy contended that the separation of powers provision limits the judiciary's role in the review of property tax assessments to the extent that the court can only take jurisdiction in those instances where a fraud has occurred. Five cases wherein Judge Murphy invalidated Section 23-15 were appealed directly to the Illinois Supreme Court through an original writ of mandamus action filed by the Cook County State's Attorney under the caption The People ex. rel. Richard A. Devine State's Attorney of Cook County, et. al. v. The Honorable Michael J. Murphy, Judge of The Circuit Court of Cook County, et.al., No. 82965.

During the pendency of the writ of mandamus, Judge Francis Barth, presiding Judge of the County Division of the Circuit Court of Cook County, ordered the immediate suspension of all tax objection complaint matters, thus halting the progress of some 20,000 cases.

On March 19, 1998, the Supreme Court granted the petition for writ of mandamus, thereby upholding the constitutionality of Section 23-15 and the "clear and convincing" evidentiary standard of proof. In the opinion written by Justice McMorrow, the court stated that Section 23-15 does not violate the separation of powers provision in that it does not grant the circuit court the same powers as that of the boards of appeals or review, since the section accounts for a presumption of correctness of the assessment. A full text of the Devine, et. al v. Murphy, et. al. opinion and dissent follow.

With regards to the some 20,000 pending tax objection complaints that had been held in suspension for the past 13 months, any case having settled and the settlement is ready to be presented to the court for approval, may now be scheduled for prove-up. The remaining cases have been placed back on court's regular call, which is now scheduled to start up again on September 1, 1998.

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COOK COUNTY TAXPAYERS GAIN ACCESS
TO PROPERTY TAX APPEAL BOARD (PTAB)

Commencing with the 1997 tax assessment year, Cook County taxpayers will have the right to appeal the assessments on commercial and industrial properties to the Illinois Property Tax Appeal Board (PTAB). Residential properties became eligible for the PTAB in conjunction with the 1996 tax year. Pursuant to Public Act 89-126, enacted on July 12, 1995 as 35 ILCS 200/16-95 et.sec., Cook County taxpayers now have the same right as taxpayers in other counties throughout Illinois, namely, to appeal the final decision of the Board of (Tax) Appeals or Board of Review to the PTAB. Previously, Cook County taxpayers were limited to only filing a Tax Complaint (formerly a Specific Objection) in the Circuit Court of Cook County.

The PTAB is a State administrative agency, completely separate from the Circuit Court, created by statute pursuant to 35 ILCS 200/16-180 et.sec. Beginning with the 1996 assessment year, residential property of six or fewer units became eligible for appeal to the PTAB. All other property (i.e. commercial and industrial) is eligible commencing with the 1997 assessment year. Taxpayers should note that they still have the option to file a Tax Complaint in the Circuit Court, instead of going to the PTAB, but not both.

Unlike the "clear and convincing" burden of proof a Taxpayer must now meet in the Circuit Court, the PTAB decides its cases based on "equity and the weight of evidence" (35 ILCS 200/16-185). Furthermore, all hearings before the PTAB are trial denovo and, unlike in the Circuit Court, there is no presumption of correctness of the assessment which the taxpayer must overcome.

All appeals to the PTAB must be filed within 30 days of either: the postmark date or personal service date of the final written notice of decision of the Board of Review; the postmark date or personal service date of written notice of the application of final adopted township multipliers applied by the local Board of Review; or the postmark date of the decision of the PTAB lowering the assessment of the subject property for the prior year, provided the Board of Review is no longer open for hearing appeals in the year in question on the date of the PTAB decision (35 ILCS 200/16-18).

Any taxpayer dissatisfied with the final decision of the PTAB may file a complaint for administrative review in the Circuit Court of Cook County or, in cases where the change in assessed valuation requested is $300,000 or more, directly in the Appellate Court for the district in which the property involved is situated (35 ILCS 200/16-195).

Now that Cook County taxpayers have a choice as to which venue to proceed in, i.e., Circuit Court or the PTAB, careful consideration must be given to the issues and evidence to be presented in each case. Although it is thought that the PTAB will provide a more expedient appeal process than the Court, it is uncertain how much impact the volume of cases to be filed from Cook County will have on its expediency.

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COOK COUNTY BOARD OF REVIEW
TO TAKE EFFECT DECEMBER 1, 1998

One of several significant changes enacted by Public Act 89-126, which is to take effect December 1, 1998, is the elimination of the Cook County Board of (Tax) Appeals and the simultaneous creation of the Cook County Board of (Tax) Review. The three member Board of Review will be elected at the 1998 general election in November 1998, with each member being selected from one of three different election districts, to each serve a four year term. The election districts, created a few years ago by the general assembly, were designed to insure bipartisan representation on the Board.

As in other counties, taxpayers should be aware that the Board of Review has the authority to not only lower assessments, but can raise assessments as well. The statute also allows interested taxing districts to intervene in the appeal process, thereby permitting an affected taxing district the right to seek an assessment increase should evidence establish that the property is underassessed. Therefore, before a taxpayer files a complaint with the Board of Review, all evidence that could affect value, purchase price, appraisals, leases, etc. should be given careful consideration.

Docket No. 82965—Agenda 37—May 1997.
THE PEOPLE ex rel. RICHARD A. DEVINE, State's Attorney
Of Cook County, et al., Petitioners, v. THE HONORABLE
MICHAEL J. MURPHY, Judge of the Circuit Court of Cook County, et a!.,
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