On May 23, 2024, the Illinois Supreme Court issued a highly anticipated ruling on whether a taxpayer is required to pay its property tax bill before pursuing an appeal at the Property Tax Appeal Board (PTAB). In Shawnee Community Unit School District v. PTAB, the Illinois Supreme Court held that payment of property taxes was not a prerequisite to filing a PTAB appeal. In certain situations, the Court's decision may impact the property tax collections of school districts and other local governments.
In this case, the owner of a power plant in southern Illinois timely filed an appeal at PTAB seeking a reduction in its 2014 assessment. While the taxpayer's PTAB appeal was pending, the taxpayer's 2014 property taxes came due. The taxpayer did not pay the taxes, and the county collector sought and won a judgment and order of sale against the taxpayer in circuit court. The taxes were purchased by a third party in 2016.
In August 2016, an intervening school district filed a motion before PTAB seeking dismissal of the taxpayer's PTAB appeal. The district argued that the taxpayer was required to pay its 2014 property taxes "under protest" in order to preserve its right to pursue an appeal before PTAB. Because the taxpayer did not pay its taxes, the district argued, PTAB should dismiss the taxpayer's appeal. The district also argued that once the county collector sought a judgment and order of sale in circuit court, the circuit court had jurisdiction over all tax matters at issue, and the court's decision should have been final.
In September 2016, PTAB denied the school district's motion to dismiss. Meanwhile, the taxpayer filed another PTAB appeal challenging its 2015 assessment. Again, the taxpayer did not pay its 2015 taxes, and the taxes were purchased by the same third party. In 2017, the taxpayer paid the full amount of its 2014 and 2015 taxes, plus penalties and interest.
In June 2019, after an evidentiary hearing, PTAB issued a decision on the taxpayer's appeals, finding that the taxpayer's property had been overvalued for tax years 2014 and 2015. PTAB dramatically reduced the 2014 and 2015 assessments on the property from $31,538,245 to $3,333,000. The school district appealed the PTAB decision to the Illinois appellate court, which affirmed the PTAB decision. The appellate court found that PTAB had not erred in reducing the taxpayer's property value and that payment of disputed taxes was not required to pursue an appeal at PTAB.
In a 5-2 decision, the Illinois Supreme Court affirmed the appellate court's ruling that payment of property taxes is not a prerequisite to filing a PTAB appeal. The Court found that nothing in Illinois law states that a taxpayer is required to pay the disputed property taxes in order to pursue an appeal of an assessment at PTAB. The only statutory requirement is for the taxpayer to file a petition with the PTAB clerk before the statutorily established deadline. Because the tight deadline means that the taxpayer must appeal before tax payments are due for the tax year at issue, the Court reasoned it would be irrational for lawmakers to intend for disputed property taxes to be paid before initiating an appeal "when, at the time of initiating the appeal, the taxpayer has not yet even received a property tax bill."
The Court also addressed the school district's argument that since the Property Tax Code requires a taxpayer who challenges an assessment in circuit court to pay the disputed taxes "under protest" before filing a complaint, the same requirement must apply to a PTAB appeal. The Court stated that the PTAB and the circuit court processes were mutually exclusive, and "there is no reason to presume the legislature intended that a statutory provision governing one should also apply to the other." Finally, the Court found that PTAB did not lose jurisdiction to review and rule on the taxpayer's appeal just because the county collector applied for judgment and order of sale in the circuit court and the circuit court entered a judgment.
While the Court's decision does not require a taxpayer to pay its property taxes to pursue a PTAB appeal, any taxpayer that fails to pay its tax bill is still subject to the enforcement provisions of the Property Tax Code. The Property Tax Code's tax sale provisions provide that unpaid property taxes are sold, resulting in the delinquent taxpayer paying penalties and interest to redeem the taxes or possibly losing ownership of the property to the tax buyer. Given the drastic consequences of not paying property taxes, the implications of the Court's decision remain to be seen.
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