Illinois Supreme Court accepts appeal of tax case

The Supreme Court of Illinois has accepted Shawnee School District’s appeal in a case concerning a nearly decade-long dispute with the school district’s largest taxpayer. 

The school district reported in a news release that in a momentous departure from longstanding Illinois law, an appellate court found that delinquent taxpayers who deliberately withhold taxes may still pursue a claim for property tax assessment relief. The news release continued:

In so doing, the court, in the case of Shawnee Community Unit School District No. 84 v. Illinois Property Tax Appeal Board, 2022 II; App (5th) 190266-U, provided a roadmap to taxpayers looking to coerce taxing districts into accepting favorable settlements, lest the taxing districts, including schools, lose the local property tax revenue they need to perform their essential functions like providing education to children and safety services to the public. 

Under the Property Tax Code, “if any person desires to object to all or any part of a property tax for any year, for any reason” he or she must make timely payment of taxes. 35 ILCS 200/23-5. 

In the Shawnee case, Rockland Capital, a Woodlands, Texas equity fund, purchased the Grand Tower Energy Center (“Grand Tower”), a Southern Illinois power plant whose property taxes accounted for half of the local tax base in a rural, low-income community. 

Rockland withheld taxes from the local school district, Shawnee, and other taxing districts for two years as Rockland sought assessment relief from the Illinois Property Tax Appeal Board (“PTAB”). 

Shawnee and the Board of Review moved the PTAB to dismiss the appeal, citing the Supreme Court, the Illinois Property Tax Code and a long line of Illinois cases requiring timely payment of taxes. 

The PTAB denied the motion to dismiss and then granted Rockland a large assessment reduction. The school district and the Board of Review appealed the PTAB’s decision. 

In affirming the PTAB, the Fifth District, Justice Barberis, found that the condition of timely payment of taxes only applies to tax appeals at the circuit court and not the PTAB. 

The Fifth District’s decision upended nearly a century of Illinois case law reaffirming the “payment under protest” doctrine meant to prevent taxpayers from harassing local taxing bodies by withholding operating funds as part of a strategy to extract favorable property tax settlements. 

Shawnee School District will now ask the Supreme Court seeking to reinstate the Illinois policy that Illinois taxpayers must timely pay their contested taxes before pursuing a property tax assessment challenge.