HOW REAL ESTATE TAXES ARE CALCULATED
In an effort to maintain our status as one of the preeminent real estate tax law firms in Illinois, Reiff Schramm Kanter & Guttman, LLC continuously endeavors to issue informative articles and blog posts that apprise our clients, and other interested real estate taxpayers, regarding the intricacies of minimizing the burdensome financial liability imposed by real estate taxes. To that end, the following article is a brief itemization of the various components that contribute to the ultimate calculation of your property’s real estate tax bill.
The tax assessment process begins with a determination by the local assessor of each property’s “fair cash value,” or market value. In Cook County, this function is performed by the Cook County Assessor while, in all 101 of the other counties in Illinois, this function is performed by the local township assessors. Assessors must give written notices to all taxpayers whenever their properties’ assessed valuations are changed. On a township-by-township basis, the assessors also publish the dates for 30-day filing periods for complaints against those proposed valuations. After any revisions have been made pursuant to the complaints filed with those assessors’ offices, the final valuations by the assessors, referred to as the “A Rolls,” are then published.
Once each assessor’s A Roll has been published, the local county Board of Review takes jurisdiction over those assessments and is able to correct any mistakes that may have been made by the assessor. Each Board of Review must likewise publish the dates for 30-day filing periods for complaints in each township. When each Board of Review has completed its assessment revisions, and has certified its final listing of property valuations, called the “B Roll,” it is transmitted to the county clerk to serve as the basis for the calculation of the final tax bills.
While the assessment appeals process has been taking place in the offices of the assessors and the Boards of Review, all of the many taxing districts serving a given property have been preparing their annual budgets, or “tax levies,” which are reports of all the funds that will be required to finance the government services for that particular taxing district for that assessment year. The taxing districts that commonly receive as much as about half of the total taxes levied on a property are the school districts, but the other taxing districts that also receive tax funds are municipalities, townships, counties and forest preserves, as well as water reclamation and mosquito abatement districts, pension funds, etc.
Once each county clerk has all the B Rolls for the townships in their county, the aggregate totals of all those assessments, or the “tax bases,” is transmitted to the Illinois Department of Revenue (“IDOR”) for a process referred to as “state equalization.” This state equalization process ensures that the total of all the property valuations determined by each of the 102 counties, when equalized, are equivalent to the relative valuations made by each of the other counties’ assessing officials. This function is utilized solely for the purpose of fairly allocating the State’s resources to the various counties based on the relative equalized total assessment for each county. Because the same equalization factor is applied to every tax parcel assessed within each county, that equalization factor does not increase any taxpayer’s tax liability. Basically, IDOR compares the local assessors’ market valuations on those parcels that were recently conveyed to the market values indicated by the transfer declarations that must be filed whenever deeds are recorded.
The total equalized aggregate assessed valuation (the “equalized tax base”) for each taxing district is then transmitted by IDOR back to the county clerks for the “extension” process. Extension is what takes place when the county clerks calculate the “tax rates” that will be used to determine each individual taxpayer’s share of the total tax levy that was submitted (or extended) by each taxing district. The tax rate is the final factor that is applied to the equalized assessed valuation of each tax parcel to determine the amount of that parcel’s tax liability for the year.
The county clerks then forward all of these figures, i.e., the equalized assessed valuations for each of the parcels in every tax base, as well as all the tax rates extended by the various taxing districts serving those parcels, to each county’s treasurer for the ultimate calculation of the final total tax bill for each of the myriad parcels, and for the printing and the mailing of those tax bills.
Our job, as your real estate tax law firm, is to do everything possible to minimize your tax liability. The greatest reductions we obtain to minimize the amounts of your tax bills come from the assessment complaints that we file on your behalf with your local assessor and/or Board of Review. By challenging the market valuation, or the classification, or the exemptions, that may affect your assessment, we are able to obtain the most significant tax reductions. However, there are other less-known legal processes we may elect to pursue on your behalf, when warranted.
In some instances, after we have done all we can to minimize your tax liability before the tax bills are issued, we choose to also file a lawsuit in the circuit court of your county contesting the tax rates that are extended by the taxing districts to the equalized assessed valuation of your property. These little known, and even less understood, tax rate objections do not challenge the valuation of your property, but rather, they challenge the tax levies extended onto the equalized assessed valuation for your property. The litigation of these tax rate objections entails a thorough analysis of the statutory requirements which regulate the processes by which taxing districts must prepare their tax levies, and then extend those tax levies onto their tax bases.
Because the many statutes regulating the tax extension processes are complicated, and also because the entire tax extension process involves many stages performed by various government offices, the litigation of our tax rate objection lawsuits may take longer than ten years before any partial refunds of real estate taxes are obtained. The considerable duration of this lengthy litigation process does, in some instances, present problems in the manner of trying to “catch-up” with each taxpayer/client by the time the partial tax refund is issued more than ten years later.
In still other instances, we may also seek partial refunds of taxes, after those taxes have been paid, through one of three potential procedures:
1) the filing of a formal request with the local assessor for retroactive assessment relief through the issuance of a Certificate of Error (“C of E”),
2) the litigation of a Tax Objection lawsuit in the circuit court of the county in which your property is located, or
3) the litigation of an assessment complaint before the Illinois Property Tax Appeal Board (PTAB) which is the state agency that oversees the Boards of Review in Illinois’ 102 counties.
In the final analysis, our clients may rest, assured that we are relentlessly acting on your behalf at every available opportunity presented to reduce your tax liability before their tax bills are issued, or to obtain the maximum partial refunds of those taxes for you after they have been paid.
REQUEST FOR REAL ESTATE APPRAISALS
In the past few years, many of our clients have taken advantage of low interest rates and have refinanced the mortgage on their commercial, industrial or residential property. If you have had a recent appraisal of your property prepared for this, or for any other purpose, please forward a copy of that appraisal to us for a determination as to whether it may serve as evidence to support an argument for a lower assessment on your property.