Commonly Used Terms

COMMONLY USED TERMS

ASSESSOR
Real Estate values for purposes of taxation are determined by the assessor. In most jurisdictions it is the township assessor who establishes the property values. In Cook County, although there are also township assessors, it is the Cook County Assessor who sets the property values.

ASSESSED VALUE
The assessed value is just a percentage of the actual cash or market value of real estate if offered for sale. In most jurisdictions, the assessed value is one-third (33.33%) of the market value. In Cook County, however, the level of assessment differs depending on the type of property. Residential property is assessed at ten percent (10%) of market value while other real estate (e.g., commercial, retail and industrial) is assessed at 25% of market value. In this way, Cook County shifts most of the property tax burden to business property.

ASSESSMENT CYCLES
Pursuant to Illinois statutes, assessors must reassess real estate in regular cycles. In Cook County, all property is reassessed every three years (the “Triennial Reassessment”). Other counties reassess property on a four-year cycle (the “Quadrennial Reassessment”). Nonetheless, property may be reassessed with proper legal notice to the taxpayer in any year. For example, the sale of real estate for a value that differs substantially from the assessor’s valuation may prompt reassessment. Moreover, counties may impose local equalization factors to adjust property values when they find overall increases or decreases in area property values from year to year.

BOARD OF REVIEW
Each county has a Board of Review comprised of three members. In Cook County, the Board of Review is elected, but in other counties the members are appointed by the county board. The Board of Review acts in the capacity of a judge to consider evidence provided by the taxpayer and assessor and to determine the correct assessment.

CERTIFICATE OF ERROR
A Certificate of Error may be issued by an assessor to correct the assessment from a prior tax year. This remedy is available even after the deadline by which to file appeals to contest an assessment for a particular tax year. However, the remedy is used sparingly and is typically reserved by the assessor to correct factual errors, such as the measurement or type of property. It is also used to allow credit for some exemptions, such as the homeowner’s exemption, when it was inadvertently omitted. Depending on the nature of the Certificate of Error, court approval is sometimes required.

EQUALIZATION FACTOR (ALSO KNOWN AS THE “MULTIPLIER”)
The Illinois Department of Revenue (“IDOR”) collects information about real estate sales from the transfer tax declaration forms that are required with each real estate transaction. The IDOR then compares the statistical information it gathers to the property valuations set by assessors in each county. The IDOR finds that assessments are lower than sales prices reported in the transfer tax declarations, then it imposes an equalization factor to increase all assessments in that county. If the equalization factor is “1,” then the IDOR has found that the assessments are consistent with sales prices.

EXEMPTIONS
This term is applied to two different categories of exemptions. First, certain uses of property entitle the owner to complete exemption from real estate taxation. Illinois statutes create exemptions when property is used for religious purposes, schools, as well as certain other uses. Petitions must be submitted to the Board of Review requesting such property tax exemptions. The Board of Review then recommends to the Illinois Department of Revenue (“IDOR”) whether the Board of Review believes that the petitioner is eligible for the exemption. Ultimately, the IDOR determines whether the exemption from property tax should be allowed.

Second, the term is applied to a series of partial exemptions established by Illinois statutes. These exemptions include the Homeowner, Senior Citizen, Senior Citizen Freeze, Veteran’s Exemption, and a variety of other such exemptions. The terms of each exemption differ, but generally reduce the assessed value by some amount. Of course, tax is the product of the assessed value * equalization factor * tax rate. Since the property tax is directly proportional to the assessed value, a reduction in assessed value results in a proportional reduction in tax.

Some exemptions, like the Senior Citizen Freeze Exemption, require annual applications to demonstrate the Taxpayer’s qualification for the exemption. It is very common for Taxpayers to think that once they apply for and obtain an exemption, it will automatically renew every year. This is not usually the case, so Taxpayers may inadvertently pay too much tax. It is important that you check every year to ensure that you receive the exemptions to which you are entitled.

ILLINOIS PROPERTY TAX APPEAL BOARD (“PTAB”)
PTAB is a state agency comprised of five members who are appointed by the Governor. PTAB hears appeals of decisions of the Boards of Review. Accordingly, an appeal to PTAB is available only if a complaint was filed with the Board of Review. An appeal to PTAB must be filed within 30 days of the Board of Review decision or certification of the assessments for the township in which the property is located. In the alternative to filing an appeal to PTAB, a taxpayer who filed a complaint with the Board of Review may file a lawsuit in the Circuit Court to contest the assessment.

SPECIFIC VALUATION OBJECTION LAWSUIT
As an alternative to an appeal to the Property Tax Appeal Board, a Taxpayer may file a lawsuit in the Circuit Court of the county in which the real estate is located. Prerequisites to filing such a lawsuit include a complaint to the Board of Review and timely payment of taxes for the tax year at issue. (Taxes must be paid within 60 days of the due date for payment of second installment property taxes or the Taxpayer is not permitted to prosecute a lawsuit to contest the assessment.)

TAX BILL
The property tax is the product of the assessed value, equalization factor and tax rate. (Tax = assessed value x equalization factor x tax rate.)

TAX LEVY
Each taxing district, like a school district, establishes a budget and determines the amount of tax money that it needs to operate (i.e., the tax levy). The tax districts all submit their requests to the County Clerk. Once the total assessed value of all real estate is determined, the County Clerk divides the tax levy by the total value of real estate in the tax district’s boundaries. The resulting percentage is the tax rate. (The calculation also takes into account the equalization factors imposed locally and by the Illinois Department of Revenue.)

TAX RATE
The tax rate for any parcel of real estate is a combination of the tax rates of all of the taxing districts in which that property is located (e.g., school districts, municipalities, library districts, mosquito abatement districts and the like). The boundaries of the taxing districts may overlap and do not necessarily follow the jurisdictional boundaries of municipalities or townships.

Each taxing district, like a school district, establishes a budget and determines the amount of tax money that it needs to operate (i.e., the tax levy). The tax districts all submit their requests to the County Clerk. Once the total assessed value of all real estate is determined, the County Clerk divides the tax levy by the total value of real estate in the tax district’s boundaries. The resulting percentage is the tax rate. (The calculation also takes into account the equalization factors imposed locally and by the Illinois Department of Revenue.)

TAX RATE LAWSUIT
Taxing districts must follow specific statutory requirements to properly pass a tax levy. For example, proposed budgets must be published and available for public review for a specific amount of time before the taxing district may vote to approve it. Illinois statutes also set limits on the amount that a budget may exceed actual operating expenses. If the statutes are not followed, property tax payers may file a complaint in the circuit court of the county in which the tax district is located to contest the tax rate that resulted from the allegedly improper tax levy. We file complaints in the Circuit Court of Cook County contesting the imposition/amount of local tax levies. Much like assessment lawsuits (specific valuation objections), the prerequisites for filing such complaints are that the tax must have been paid on time and in full.

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