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Strict Construction of Property Tax Exemptions in Illinois Law

On May, 30, 2023, the Cook County Circuit Court, Law Division affirmed the Illinois Department of Revenue’s holding that the Woman’s Library Club of Glencoe is not entitled to a property tax exemption under 35 ILCS 200/15-65(b).

In 2014, North Shore Exchange operated a donation and consignment retail shop for the purposes of donating 100% of its net proceeds from sales to various charitable organizations.  The property used by North Shore Exchange at 372 Hazel Ave., Glencoe was owned by the Woman’s Library Club who rented its space for $500.00/mo. to the North Shore Exchange.  The Illinois Department of Revenue and the Cook County Circuit Court set forth certain standards in Section 15-65 of the Illinois Property Tax Code which provides that property tax exemptions are strictly construed and provide that property tax exemptions must be “actually and exclusively used for charitable or beneficent purposes, and not leased or otherwise used with a view to profit.”

In its review, the ALJ concluded that the stipulation of facts entered by both properties did not warrant the grant of a property tax exemption for the Woman’s Library Club where its by-laws state that an applicant to the club can be terminated for non-payment of dues contrary to the first element of the Methodist Old Peoples Home v. Korzen test for property tax exemptions, which requires that the charity be operated for the benefit of an “indefinite number of persons”.  The Cook County Circuit affirmed the Department of Revenue’s denial of North Shore Exchange’s application of a property tax exemption because it did not satisfy its burden of establishing its entitlement by “clear and convincing evidence”.  See Evangelical Hosp. Corp. v. Department of Revenue.

On its review of the Department of Revenue’s decision, the Cook County Circuit Court concluded by citing Illinois Supreme Court precedent in Turnverein “Lincoln” v. Bd. of Appeals of Cook County which held that “if property, however owned, is let [leased] for a return, it is used for a profit, and, so far as its liability to the burden of taxation is concerned, it is immaterial whether the owner actually makes a profit or sustains a loss”.  Therefore, the base rent of $500.00/mo. from North Shore Exchange to the Woman’s Library Club of Glencoe causes North Shore to fail to establish by clear and convincing evidence that the subject qualified for a 2014 property tax exemption under the Illinois Property Tax Code, Section 35 ILCS 200/15-65.