SUCCESSFUL

SUCCESSFUL

REAL ESTATE

TAX REDUCTION

A Strategy Guide for Taxpayers

CHRISTOPHER B. COHEN, Esq.

Cohen Law Firm

444 Greenleaf

Glencoe, IL 60022-1908

847/835-4002

847/867-8500

847/835-0088 Fax

Due to provisions of the Illinois Rules of Professional Conduct,

this Guide is designated as "Advertising Material."

REAL ESTATE

TAX REDUCTION

A Strategy Guide for Taxpayers

CHRISTOPHER B. COHEN, Esq.

CONTENTS

Table of Contents.................................................................................................... 2

About the author..................................................................................................... 8

Preface................................................................................................................ 9

Section I Understanding the Real Estate Tax System ................................................. 11

Basic Concepts...................................................................................................... 12

A. Administrative Agencies...................................................................................... 12

B. Assessed Value.................................................................................................. 12

C. Classification in Cook County............................................................................... 12

D. Statutory Standard............................................................................................. 13

E. Equalizer......................................................................................................... 13

F. Personal Property.............................................................................................. 15

2. Real Estate Tax Formula..................................................................................... 16

A. Formula.......................................................................................................... 16

B. Example.......................................................................................................... 16

C. Relationships.................................................................................................... 16

3. Effect of the Multiplier............................................................................................ 17

A. Multiplier's Effect.............................................................................................. 17

B. Equalized Assessed Value.................................................................................... 17

C. Recent EAV's................................................................................................... 18

D. Equalized Tax Rate............................................................................................ 19

E. Using the Multiplier............................................................................................ 19

F. Historical Rates................................................................................................. 21

4. Finding Your Property's Fair Market Value.............................................................. 22

A. Approaches to Determining Value.......................................................................... 22

B. Leases................................................................................................................

C. Catastrophe...................................................................................................... 23

D. Occupancy/Vacancy Factors................................................................................ 23

E. One-Year-Only Reductions................................................................................... 24

F. Environmental Hazards....................................................................................... 25

G. Appraisals....................................................................................................... 26

H. Short Form Appraisals........................................................................................ 26

5. Hypothetical Taxes on a $1,000,000 Property........................................................... 29

6. Supporting Documentation....................................................................................... ............................................................................................................................ ............................................................................................................................ 30

7. Changing a Property's Assessed Value.................................................................... 32

A. Cook County.................................................................................................... 32

B. Reassessment Notices and Assessor Complaints......................................................... 32

C. Overassessment Complaints.................................................................................. 33

D. Board of Appeals............................................................................................... 33

E. Board of Review................................................................................................ 34

F. Revised Board................................................................................................... 35

G. Township Filing Dates........................................................................................ 36

H. Tax Objection Complaints.................................................................................... 37

I. Appeal Alternatives............................................................................................. 37

J. Burdens of Proof................................................................................................ 39

K. Property Tax Appeals Board................................................................................. 39

8. Certificates of Error........................................................................................... 41

A. C/E Procedure................................................................................................. 41

B. Interest............................................................................................................ 41

C. Reasons for C/E's.............................................................................................. 42

D. Board Endorsements........................................................................................... 43

E. Board Filings.................................................................................................... 43

F. Partial Payment Conflict...................................................................................... 44

G. C/E and Tax Sales.............................................................................................. 45

9. Paying Taxes Under Protest................................................................................. 46

A. Tax Payment Procedure...................................................................................... 46

B. Paying Under Protest.......................................................................................... 46

C. Old Procedure.................................................................................................. 47

D. New Procedure................................................................................................. 47

E. Deadline.......................................................................................................... 48

F. Protest Requirements.......................................................................................... 48

G. Benefits of Protesting.......................................................................................... 48

H. Rate Objections................................................................................................. 49

10. Types of Filings............................................................................................... 51

Section II Provisions of the Illinois Property Tax Code .............................................. 52

11. Illinois Reassessment Cycles by County/District....................................................... 53

A. Cook County Triennials....................................................................................... 53

B. Downstate Quadrennials...................................................................................... 54

C. Lake County..................................................................................................... 54

D. St. Clair County................................................................................................ 55

E. Madison County................................................................................................ 55

12. Cook County Classification System....................................................................... 57

13. Real Estate Tax Incentive Programs...................................................................... 59

A. Incentive Classes............................................................................................... 59

B. Rules.............................................................................................................. 61

14. Tax Exemptions and Freezes............................................................................... 63

A. Exemption Types............................................................................................... 63

B. Leases............................................................................................................. 64

C. Maintaining Tax Exemptions................................................................................. 64

D. General Homestead Exemption.............................................................................. 64

E. Senior Citizen's Homestead Exemption.................................................................... 65

F. Senior Citizen's Assessment Freeze........................................................................ 65

G. Homestead Improvements Exemption..................................................................... 66

H. Disabled Veterans.............................................................................................. 67

I. Historic Building Freeze...................................................................................... 68

15. How Property is Defined for Assessment............................................................... 69

A. Real Property Defined........................................................................................ 69

B. Personal Property.............................................................................................. 69

C. Real Estate Transfer Tax...................................................................................... 70

D. Condominiums.................................................................................................. 70

E. Automatic Teller Machines................................................................................... 72

F. Lien Date (Duplication of ?)................................................................................. 72

G. Farmland......................................................................................................... 73

H. Land Unit Prices................................................................................................ 73

I. Omitted Property................................................................................................ 74

J. Abatement........................................................................................................ 75

K. Leaseholds....................................................................................................... 75

L. Short Leases..................................................................................................... 76

16. Taxes and Tax Rates.......................................................................................... 77

A. Illinois Governmental Units Taxing Real Estate.......................................................... 77

B. Special Districts Authorized by the Illinois General Assembly........................................ 77

C. How Governments Calculate Their Tax Rates............................................................ 78

D. Budget/Appropriation Process.............................................................................. 78

E. Levy............................................................................................................... 79

F. Levy Terminology.............................................................................................. 79

G. Tax Rate Calculation........................................................................................... 79

H. Tax Extension................................................................................................... 80

I. Time Line......................................................................................................... 80

17. Limits on Taxation............................................................................................ 81

A. Truth in Taxation Law......................................................................................... 81

B. Tax Cap Law.................................................................................................... 81

C. Calculating the Cap............................................................................................ 82

D. Exceptions....................................................................................................... 83

E. Adjustments to Tax Caps...................................................................................... 84

F. Use of Prior Year EAV........................................................................................ 84

G. Tax Increase..................................................................................................... 85

H. Consumer Price Index........................................................................................ 85

I. Estimated Levy................................................................................................... 86

J. Rate Ceilings........................................................................................................

Section III Tax Collection and Delinquency............................................................. 87

19. The Illinois Tax Environment............................................................................... 88

A. Largest Local Revenue Source.............................................................................. 88

B. Higher Per Capita Property Taxes.......................................................................... 88

20. The Tax Collection System................................................................................. 83

A. Collection Overview........................................................................................... 90

B. Mailing of Bills.................................................................................................. 90

C. Tax Prepayment................................................................................................ 91

D. Tax Bill Address Changes.................................................................................... 92

E. Refunds........................................................................................................... 92

F. Tax Year......................................................................................................... 92

G. Tax Liability..................................................................................................... 93

H. Penalty Date..................................................................................................... 93

I. Delinquency...................................................................................................... 94

J. Notices............................................................................................................ 94

K. Sale of Delinquent Taxes..................................................................................... 95

L. Collecting Delinquent Taxes.................................................................................. 95

M. Overview or Rationale........................................................................................ 96

N. Redemption...................................................................................................... 97

O. Consequences................................................................................................... 97

P. Reasons for Delinquencies.................................................................................... 97

Q. Partial Tax Payments.......................................................................................... 98

R. Payment Under Specification................................................................................ 98

21. Tax Collection Books......................................................................................... 99

A. Warrant Books.................................................................................................. 99

B. Judgment Books................................................................................................ 99

22. Annual Tax Sales........................................................................................... 101

A. Pre-sale Requirements....................................................................................... 101

B. Auction.......................................................................................................... 102

C. Tax Purchases................................................................................................. 103

D. Redemption.................................................................................................... 103

E. County Record Keeping..........................................................................................

23. Tax Forfeitures.............................................................................................. 105

24. Scavenger Sales............................................................................................. 107

A. Sales............................................................................................................. 107

B. Bid Requirements............................................................................................. 107

C. Auction......................................................................................................... 107

D. Redemption.................................................................................................... 108

E. No Cash Bid.................................................................................................... 109

F. Comparison with Annual Sale.............................................................................. 109

26. Tax Deeds

A. Owner's Redemption……………………………………………………………………………………………113

B. Notices.......................................................................................................... 114

C. Deed Process.......................................................................................................

D Attacking Tax Deeds...............................................................................................

27 Indemnity Fund.............................................................................................. 115

A. The Fund...................................................................................................... 115

B. Indemnification............................................................................................... 115

C. Causes.......................................................................................................... 116

D. Lawyer's Fees................................................................................................ 116

28. Liability for Taxes........................................................................................... 118

A. Liens on the Property........................................................................................ 118

B. Personal Liability for Taxes (Actions in Debt).......................................................... 118

C. Statute of Limitations......................................................................................... 119

29. Sales in Error................................................................................................. 120

Section IV Reviewing Your Strategy: Tax Reduction Tips ......................................... 121

30. Tax Tips...................................................................................................... 122

1. Annual Protests................................................................................................ 122

2. Protest Results................................................................................................. 122

3. Personal Property............................................................................................. 122

4. Vacant Commercial Property............................................................................... 122

5. Document Comparison....................................................................................... 122

6. Address Changes.............................................................................................. 122

7. Address Correction Confirmation......................................................................... 123

8. Lease Negotiations............................................................................................ 123

9. Tax Division.................................................................................................... 123

10. Tax Consolidation........................................................................................... 123

11. Excess Land.................................................................................................. 124

12. Certificates of Error......................................................................................... 124

13. Tenant Prepayment.......................................................................................... 124

14. Lenders........................................................................................................ 124

15. Agent........................................................................................................... 125

16. Action in Debt................................................................................................ 125

17. Exempt Leases............................................................................................... 125

18. Title to Lease Improvements.............................................................................. 125

19. Accountant Breakouts...................................................................................... 125

20. Tax Return Expenses....................................................................................... 126

21. Remaining Improvements.................................................................................. 126

22. Adding Improvements...................................................................................... 127

23. Building Permits............................................................................................. 127

24. Buying and Selling Property.............................................................................. 127

25. Prorating Taxes.............................................................................................. 127

26. Important Questions......................................................................................... 127

27. Home Improvements........................................................................................ 128

28. Age Factor.................................................................................................... 128

29. Purchase Price............................................................................................... 128

30. Proration on Upcoming Tax Bill.......................................................................... 128

31. Proration Plus C/E.......................................................................................... 128

32. Buyer Research of Low Tax Areas....................................................................... 129

33. Repair Escrows.............................................................................................. 129

34. Amortization of Expenses.................................................................................. 129

35. Environmental Hazards.................................................................................... 129

36. Interest Free Loan........................................................................................... 130

37. C/E Tax Debt................................................................................................. 130

Appendix.......................................................................................................... 131

Exhibit 1 Assessment Notice....................................................................................... ................................................................................................................ 132

Exhibit 2 Complaint: Cook County Assessor................................................................... 133

Exhibit 3 Complaint: Board of Appeals.......................................................................... 134

Exhibit 4 1992 Assessment Filing Dates......................................................................... 135

Exhibit 5 1993 Assessment Filing Dates......................................................................... 136

Exhibit 6 1994 Assessment Filing Dates........................................................................ ................................................................................................................ 137

Exhibit 7 1995 Assessment Filing Dates......................................................................... ................................................................................................................ 138

Exhibit 8 1996 Assessment Filing Dates.................................................. …………………….. 139

Exhibit 9 Cook County Triennial Map........................................................................... 140

Exhibit 10 Cook County Classification Codes................................................................... ................................................................................................................ 141

Exhibit 11 Cook County Enterprise Zones....................................................................... ................................................................................................................ 149

Exhibit 12 Chicago Enterprise Zones............................................................................. ................................................................................................................ 151

Exhibit 13 Class 9 Incentive Eligible Areas...................................................................... 152

Exhibit 14 Low Income Map........................................................................................ ................................................................................................................ 153

Exhibit 15 Cook County Board of Appeals Rules............................................................... 154

Exhibit 16 Property Tax Appeal Board Brochure............................................................... 159

Exhibit 17 Land Depth Factors..................................................................................... 164

Exhibit 18 Annual Homeowners Exemption Application...................................................... 165

Exhibit 19 Cook County Agricultural Questionnaire...................................................... 166

Exhibit 20 Map System/Taxpayer Address Change....................................................... 168

Exhibit 21 Real Estate Tax Practice Group.................................................................. 169

Glossary........................................................................................................... 171

Abbreviations..................................................................................................... 172

Index................................................................................................................ 180

ABOUT THE AUTHOR: CHRISTOPHER B. COHEN

Chris Cohen has served in government at the city, county, state and federal levels. He concentrates his practice in administrative and government law, including real estate tax reduction, zoning and legislative liaison.

Mr. Cohen represents owners of major commercial, multi‑family residential and industrial buildings in seeking the lowest possible real estate tax assessment warranted by the facts and evidence available. He is experienced in filing complaints with the Cook County Assessor's Office and appeals with the Cook County Board of (Tax) Appeals. After all administrative remedies are exhausted, in appropriate cases, assessments are appealed to the Cook County Circuit Court or to the Illinois Property Tax Appeals Board (PTAB).

Mr. Cohen's extensive governmental experience includes serving as Alderman from the 46th Ward in the Chicago City Council in the 1970s, as the Midwest Regional Director in the US Department of Health & Human Services' Chicago office under Cabinet Secretaries Joseph Califano and Patricia Harris, and as a member of the Federal Regional Council. In this capacity at HHS, he was the liaison to state, local and federal elected officials, including 106 Midwest Members of Congress. As a member of the Federal Regional Council he met with Regional Directors of cabinet level federal agencies to solve inter‑agency problems referred by the White House or raised by governors or mayors. During a leave of absence from his law firm in the fall of 1992, Mr. Cohen served on President Clinton's national campaign staff at headquarters in Little Rock, Arkansas.

Mr. Cohen is licensed to practice law in Illinois, Wisconsin and the District of Columbia.

He received his JD degree from the University of Michigan Law School (1967) and his undergraduate degree from the University of Michigan (1964). He has taught 5 full semester courses to graduate students at Northwestern, DePaul and the University of Illinois at Chicago. A licensed Illinois Real Estate broker, he teaches seminars to brokers and agents to meet their continuing education licensing requirements.

This book was prepared to inform readers and not to provide substantive legal advice. For further information or to consider whether these ideas fit within your business plans, you may contact your own attorney or this author.

PREFACE

Real estate taxes are the bedrock of local government funding. They generate $10 billion annually for the 6,000 local taxing districts in Illinois. In 1990 Illinois property taxes totaled more than the state corporate income tax, the state individual income tax, and the state sales tax combined.

While real estate taxes are an accepted cost of doing business for many organizations, they comprise one of the largest single expenses of a business after payroll. Local taxing bodies can be a 25 to 40 percent "partner" in the annual gross income (actual or imputed) of commercial real estate.

Of course, property owners are responsible for paying their calculated share of real estate taxes. However, assessing the value of a property on which those taxes are based is an inexact science at best. Even though government assessors follow mandated standards and criteria for assessing property values, assessments may not always take into account the full range of provisions allowed by law. And, of course, there is a significant judgment factor on which experts can, and do, disagree. Property owners are well advised to become familiar with their rights, the laws and conditions that can affect assessed values, and their options for challenging tax bills based on those values.

This guide is designed to do just that. It will give you an overview of the Illinois real estate taxation system and information you need to keep your taxes at their lowest. You will learn what agencies are responsible for the various aspects of the real estate tax system, how property is assessed, how taxes are calculated, what procedures are for contesting the assessed value of your property, and many other tips and concepts to help you develop and evaluate a tax reduction strategy.

Because many tax reduction procedures require legal counsel, you are advised to consult a real estate tax reduction attorney before taking action on assessments or real estate taxes. In any case, the first step to a successful tax reduction strategy is to be an informed property owner. This will help your attorney do the best job possible for you.

Following is a brief list of services you can request from an attorney in order to reduce your taxes. These procedures and the background you need to understand them are explained in detail throughout this guide.

• Reduction of the property's current (1997) assessed value through filing a complaint with the local assessing official. A successful complaint results in reducing the next year's bill (e.g. 1997 taxes due in 1998).

• Reduction of the property's current assessed value through the filing of an appeal with the board of review. A successful appeal results in reducing the upcoming tax bill.

• Further reduction of the property's assessed value through filing of a tax objection in circuit court. A successful suit results in a partial refund of taxes plus 5% interest per year.

• Alternatively, further reduction of the property's assessed value through filing an appeal with the Illinois.

• Reduction of the assessed value for a prior year or years through the filing of a certificate of error with the assessor. If successful and when confirmed by the circuit court, this results in a retroactive tax refund (assuming taxes were paid) or a reduction in taxes owed.

• Paying taxes under protest each fall and filing a tax rate objection. This may result in a small tax refund plus 5% interest per year.

• Filing an exemption application with the board of appeals and Illinois Revenue Department for specified properties and uses. If granted, this can result in the complete elimination of taxes.

• Requesting tax incentive status for certain industrial or commercial properties. When appropriate, this results in reduced taxes for a specified number of future years.

After reading this guide you will be well on your way to understanding the secrets of real estate tax reduction. I am confident you will continue to find these pages a valuable reference in your efforts to keep property taxes under control. References to procedures and laws in this guide are summaries and are not meant to be complete or all-encompassing. If you have questions or desire further information, you may contact me.

Christopher B. Cohen, Esq.

Glencoe, Illinois

December 1, 1998

SECTION IUNDERSTANDING THEREAL ESTATE TAX SYSTEM

1. BASIC CONCEPTS

A. Administrative Agencies

Assessment of "real property" in Illinois is governed by provisions of the Illinois Property Tax Code, which can be found in the Illinois Compiled Statutes (ILCS) beginning at 35 ILCS 200/1-1. Real property is defined as the land and all buildings, improvements and permanent fixtures on or in it, including oil, gas and coal.

Real estate taxes are administered locally by each of Illinois' 102 counties. In Cook County, assessing officials and relevant administrative agencies are:

1) Cook County Assessor

2) Cook County Board of (Tax) Appeals

3) County Clerk and

4) County Treasurer (Collector).

In the remaining 101 counties property taxes are assessed and administered by:

1) township assessor (or multi-township assessor)

2) supervisor of assessments (or county assessor)

3) board of review

4) property tax appeal board county clerk and

5) county treasurer (collector).

Not all taxing districts levy real estate taxes, even though they are allowed to. For example, the Village of Schaumburg receives so much sales tax from Woodfield Mall that recently it has been able to operate its government without levying real estate taxes.

B. Assessed Value

The Illinois legislature -- the General Assembly -- has declared that the amount of tax to be paid on a given property will be calculated according to the property's assessed value (AV). The General Assembly has also stipulated that a property's assessed value is one-third, or 33 1/3% of its fair market value (FMV). A property's fair market value is what a willing buyer will pay to a willing seller. This formula applies in all counties of Illinois except Cook.

C. Classification in Cook County

Cook County is the only county in Illinois that currently classifies real estate, applying different assessment ratios (AR) for each class in order to accommodate the diversity of property types and values in the county. Properties in Cook County are classified and assessed as follows. For more detail, see the Chapter below entitled "Cook County Classification System."

ASSESSMENT RATIOS (AR)

Property Use	Cook County Class	Cook County AR	Other Counties' AR
Commercial	5a	38.0%	33.3%
Industrial	5b	36.0%	33.3%
Non-Profit	4	30.0%	33.3%
Residential (over 6 units)	3	33.0%	33.3%
Residential (under 7 units)	2	16.0%	33.3%
Vacant Land	1	22.0%	33.3%

Cook County's Classification Ordinance has been passed and amended by the Cook County Board of Commissioners pursuant to authority granted in the 1970 Illinois Constitution at Article IX, section 4. The Classification Ordinance authorizes not only single family residences to be assessed at 16% of FMV, but condos, co-ops, and apartment buildings with fewer than seven units are also assessed at the low 16% of FMV. Each unit in a condo or co-op building is assessed at 16% as if it were a single family home no matter how large the building is. Even though the assessment ratio for individual properties in Cook may vary, the overall ratio for all properties in the county is supposed to average 33.3%, just as for all other counties.

D. Statutory Standard

By law, the average AV for all properties in each Illinois county is supposed to equal 33.3% of the FMV for all those properties collectively (see Property Tax Code Sections 200/1-55 and 200/9-145). The Illinois Revenue Department performs a sales ratio study annually to be sure that aggregate AVs from one county to the next are at the same 33.3% ratio when compared to FMVs.

E. Equalizer

Not all local assessing officials agree as to the assessed value of real estate from one jurisdiction to the next. To remedy this situation, the Illinois Revenue Department is required by the state legislature to exercise its oversight function by creating an equalization factor for each county (200/8-5). It must also publish its methods and procedures used in equalizing assessments among the counties.

After the chief county assessing official and the board of review have determined what the assessed values will be, the Illinois Revenue Department provides a county‑wide equalization factor which the county clerk applies to virtually all property in his or her county. (200/18-40). This factor is intended to equalize the assessment between counties and to produce a ratio of fair market value (FMV) to assessed value (AV) of 3:1. (200/17‑5). This means that FMV ÷ AV = 3 or conversely that AV ÷ FMV = 1/3 or 33.3%. The result of multiplying the property’s AV by the county equalizer (E) results in the equalized assessed value (EAV) for that property.

If the average AV in a county does not equal 33.3% of aggregate FMV, the Illinois Revenue Department modifies the state's equalizer for that county, also called the equalization factor or multiplier. To find the multiplier, the Department picks a sample of properties--it does not have adequate staff to check every property--and compares their sale prices as listed on the Real Property Transfer Tax Declaration form (Green Sheet). These forms are filled out at the time a property sells. The forms list the price so transfer taxes can be paid on the number of dollars stated on the Declaration form. The higher the sales price, the higher the transfer tax is. Local assessing officials as well as the Illinois Revenue Department use the number on a Green Sheet form as the property's official FMV. To calculate . . .

In most counties the AV of all properties divided by the FMV of all properties equals the statutory standard of 33.3%. Consequently, in these counties, such as DuPage and Lake, the equalization factor would be 1.0000. An equalizer above 1.0000 would mean a higher Equalized Assessed Value (EAV) and therefore higher taxes (assuming all other things remain the same). An equalizer below 1.0000 would mean a lower EAV and therefore lower taxes (all other things remaining equal).

The Illinois Revenue Department takes the position that Cook County properties are underassessed and has therefore established the multipliers listed below--all of which for Cook County exceed 1.0000. The Cook County Assessor strongly disputes this position. Learned opinion is divided on the issue. Those supporting the Assessor take issue with the state's samples and its method for calculating the equalizer. Others reason that mathematically the equalizer for Cook County could never fall below 1.4000 because the county classifies property and because such a disproportionately high share of all parcels in the county is classified as Class 2 residential (see the chapter below entitled "Cook County Classification System") with a low assessment ratio of 16%. The 1.2 million residential parcels are approximately 80% of the total 1.5 million parcels of all types in Cook County.

C. Relationships

These calculations illustrate several relationships (corollaries) that are useful when evaluating real estate tax issues.

Assessed Value = Fair Market Value x Assessment Ratio(AV = FMV x AR)

Equalized Assessed Value = Assessed Value x Equalizer(EAV = AV x E)

Equalized Tax Rate = Tax Rate x Equalizer(ETR = TR x E)

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6. SUPPORTING DOCUMENTATION

Using tax year 1998 as an example, a tax attorney needs some or all of the following information from the taxpayer, depending on the assessment analysis method to be used:

 The property's legal description from a title policy or the transfer tax declaration form.

 Evidence of the date the property was purchased, such as a copy of the real estate tax transfer declaration, deed or closing statement.

 Identity of the buyer and seller for purchases occurring after 1/1/95 (3 years for the board) and 1/1/93 (5 years for the assessor).

 The sales price in dollars for purchases within three years from the last lien date (for the board) and within five years from the last lien date (for the assessor).

 Information on whether the sale was between related parties.

 Information on whether the sale was due to foreclosure or bankruptcy.

 Explanation of unusual factors if the purchase price was too high. For example, was a premium price paid in order to assemble an entire block of property?

 Evidence of any recent construction or improvements, including construction contracts and building permits.

 Evidence that recent construction either 1) enhances the value of the property and should be used to assess higher taxes or 2) is only deferred maintenance, repair, or replacement of existing improvements, which does not enhance the property's value, and therefore should not be used to assess higher taxes.

 Survey of the property or site plan.

 Copies of any prior appraisals, whether for lending or tax reduction purposes.

 Income and expense statements (if a rental property) or income tax returns.

 Reason any income and expense statements are not audited. For example, a privately held company would not require audited income and expense statements.

 Rent roll indicating the size of each tenancy and what rent and expenses each tenant is responsible for, such as electricity, common area maintenance, taxes and snow removal.

 A copy of the building lease or, if multiple leases exist, a representative sample lease plus a summary of lease terms.

 The percentage of the property that is owner occupied.

 If vacancy exceeds 10%, a month-by-month summary of the number of square feet occupied for each of the prior three years and a statement as to the total number of rentable square feet.

 Written explanation of reasons for vacancies, duration of vacancies, and attempts to lease.

 Copies of listings and lease advertisements (for rental properties with vacancies exceeding 10%).

 For a 100% vacant building, evidence that it is also boarded up (assuming this is true).

 Information on any petitions for division or consolidation of tax parcels filed on the property in the last 3 years.

 Number of square feet in the building (if commercial or industrial property).

 Number of square feet of any office space (if an industrial building).

 Number of rental units of each type, e.g. efficiency or two bedroom (if an apartment building).

 Percentage of residential space (if a commercial or industrial mixed-use building containing apartments).

The importance of promptly providing requested data, affidavits and documents to the real estate tax attorney cannot be over stressed. Assessing officials have thousands of files to review. Those complaining taxpayers with incomplete evidence may be granted only a small reduction or none at all. To be considered, all evidence must be in writing.

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10. TYPES OF FILINGS

Type of Filing	Tax Paid As Prerequisite For Filing	Result If Successful	Interest Paid By County	Approximate Wait Time After Filing
Assessor Complaint	No	Reduced Tax	None	5 months
Board Appeal	No	Reduced Tax	None	5 months
Certificate of Error	No	Refund Check or Reduced Tax*	None	2 years
Tax (Specific) Objection	Yes	Refund Check	5%/year	5 years
Illegal Rate Protests	Yes	Refund Check	5%/year	9 years

*A successful C/E can have one of two results. If taxes were prepaid, the result of a winning C/E will be a tax refund check of some amount (but no interest). If taxes were not prepaid, the result of a successful C/E will be a reduction in the amount of taxes owed.

A successful filing that results in relief for one taxpayer can have consequences for another taxpayer whose property is in the same taxing body. The last three types of filings listed above can result in reductions but only after tax bills are calculated and mailed out. The top two filings are ruled on before tax bills are calculated. This means that within a taxing body, taxpayers whose assessments are reduced by the local assessing official (township assessor, county assessor, Board of Appeals or Board of Review) cause taxes to increase for those whose appeals were rejected and for those who filed no appeals at all.

SECTION IIPROVISIONS OF THE ILLINOIS PROPERTY TAX CODE

11. ILLINOIS REASSESSMENT CYCLES BY COUNTY/DISTRICT

A. Cook County Triennials

Cook County's 1.5 million parcels of real estate are divided among 38 townships, eight in the city of Chicago and 30 in suburban Cook County. These townships are grouped into three unequal sections, each of which is reassessed once every three years.

CHICAGO ASSESSMENT DISTRICT: The following townships located within the city of Chicago will be reassessed in 2000, 2003, 2007 and so forth:

Hyde Park

Jefferson

Lake

Lakeview

North

Rogers Park

South

West

NORTH SUBURBS ASSESSMENT DISTRICT: The following north and northwest Cook County townships will be reassessed in 1990, 1998, 2001, 2004 and so forth:

Barrington

Elk Grove

Evanston

Hanover

Leyden

Maine

New Trier

Niles

Northfield

Norwood Park

Palatine

Schaumburg

Wheeling

SOUTH SUBURBS ASSESSMENT DISTRICT: The following west and south Cook County townships will be reassessed in 1999, 2002, 2005 and so forth:

Berwyn

Bloom

Bremen

Calumet

Cicero

Lemont

Lyons

Oak Park

Orland

Palos

Proviso

Rich

River Forest

Riverside

Stickney

Thornton

Worth

Cook County has more than 800 taxing bodies. The 1.5 million real estate parcels in Cook County are not divided equally among the three triennial areas. The parcels in each area are as follows:

ASSESSMENT DISTRICTS NUMBER OF PARCELS % OF COUNTY

ASSESSED

Chicago 43%

N. Suburbs

S. Suburbs

Cook County 1,500,000 100%

B. Downstate Quadrennials

For counties other than Cook, taxable real estate is reassessed once every four years. Some of these 101 downstate counties are divided into four assessment districts, with one district being reassessed each year on a rotating basis.

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17. TAXES AND TAX RATES

A. Illinois Governmental Units Taxing Real Estate

There are more than 800 taxing bodies in Cook County. Illinois has more local governments taxing real estate than any of the other 49 states. In 1992 Illinois had 6,048 local taxing bodies divided into the following categories:

i.Annual Protests

Even if you file an assessment complaint once every three years or file a board appeal, you can and should still pay your taxes under protest every year. New legislation eliminates the requirement to fill out a special protest letter. Consequently, it is no longer necessary to send checks to your lawyer to be paid under protest. Taxes are deemed to be protested is paid in full along with all penalties and interest, if any are due, within 60 days of the due date.

ii.Protest Results

Many taxpayers complain that they paid their taxes under protest but never received any relief or tax refund. This will continue to be true unless each year they also have a lawyer file an illegal rate objection in the circuit court. Tax protests by themselves are meaningless.

iii.Personal Property

Be sure to inform your lawyer about the existence of automatic teller machines, moveable safes, satellite dishes, and other large freestanding items on the premises. This will encourage the lawyer to check the assessor’s underlying records. Some of these items may be considered personal property (not taxable) as opposed to real property (taxable).

iv.Vacant Commercial Property

A buyer of vacant commercial property must realize that taxes can go up twice‑‑once if the new purchase price of it is higher than the FMV in the assessing official's records and a second time when the building fills up with tenants. A partially filled or full building will receive a higher assessment than an empty one.

v.Document Comparison

A task that buyers often fail to ask their attorneys to undertake before closing is to review records of the local assessing official. Buyers' attorneys should assure that county records are similar to what the buyer thinks is being sold.

vi.Address Changes

Immediately after closing, a purchaser should have the county’s computer substitute her name for the seller’s to assure receipt of Reassessment Notices and tax bills. Failure to receive a tax bill or assessment notice is not an excuse for non‑payment of taxes nor for failure to timely seek a reduction in assessed values. See the change of address exhibit form at the end of this book.

vii.Address Correction Confirmation

Because it is crucial to know if a change of address has been filed and has taken effect, buyers may want to request a duplicate tax bill from the county treasurer and a current assessment notice from the local assessing official. Each contains the name of the person to whom tax bills and assessment notices respectively are mailed. The data bases from which these two documents are generated may differ so it is important to order and check both.

viii.Lease Negotiations

During lease negotiations, triple net tenants (those to whom the landlord passes on all of his taxes, utility payments and insurance premiums) who will occupy a significant portion of a building may want to bargain for the right to contest assessments instead of the landlord. Triple net tenants may also want leases written so they gain the right to have tax bills and assessment notices mailed by the county directly to them rather than to the landlords.

ix.Tax Division

If you buy or sell property that is only a portion of one or more PINs (tax parcels), a tax division should be filed with the assessor. This assures that a new tax parcel and new PIN is created with the legal description of your property only. The other portion will then be given its own new PIN. A division avoids the possibility of one party accidentally paying the taxes for both. Also, in the event the other party fails or refuses to pay its portion of the taxes, a division avoids your having to pay taxes on the entire parcel in order to avoid a tax sale.

x. Tax Consolidation

The reverse of a division is a consolidation. If, for example, six lots and six PINs underlie one building, you may want to consolidate them into one number. This will generate only one notice and a single real estate tax bill.

xi. Home Improvements

Reductions for home improvements expire after four to six years. Thus, if the seller built an addition on his house five years ago, for example, and it expires in the year of his sale, the new buyer will be surprised by the resulting tax increase due to expiration of the home improvements exemption.

xii. Age Factor

Even if the assessment remains unchanged, a homeowner under age 65 who purchases from an over‑65 seller will receive a higher tax bill due to loss of the senior citizen’s exemption.

xiii. Purchase Price

Try to reduce taxes by reducing a recent purchase price. Methods for reducing the sale price on which a newly purchased property will be assessed are to argue that:

• the price also included inventory, machinery or other personal property, or

• the price included home appliances, furniture, tools and other personal property.

Buyers should negotiate to obtain a bill of sale listing all personal property transferred with the real estate. They should be sure that these amounts for personal property are deducted from the total purchase price when the net amount paid for real estate is listed on the Illinois Transfer Tax Declaration form (Green Sheet).

xiv. Proration on Upcoming Tax Bill

Often the purchase price will exceed Assessor's FMV. The buyer may want to calculate what the higher tax bill would be based on the higher FMV (sale price) and prorate based on that estimated tax bill rather than on the most recent actual tax bill. The most recent tax bill issued by the County Treasurer is based on last year's assessed value, ie, on the pre‑sale value.

xv.Proration Plus C/E

After purchasing real estate, a buyer should compare the Assessor's proposed FMV and the contract price. If the Assessor's FMV exceeds the purchase price, a buyer may want to prorate existing taxes and then file an assessment reduction complaint for the current year and a Certificate for the prior year. Depending on how the sales contract is written, a reduction could benefit the buyer if the proration was based on the higher (so far) unreduced taxes. Depending on how the contract is written, one party or the other would be allowed to keep the tax refund if a C/E is successful for a prior year. Normally, the refund goes to the party that wrote the check (seller) even if another party (buyer) filed the C/E to get it. Consequently, a party should attempt to negotiate the contract terms to favor his position.

xvi.Buyer Research of Low Tax Areas

Before purchasing real property, buyers should research local tax rates which vary significantly. Not all taxing districts levy real estate taxes, even though they are allowed to. For example, the Village of Schaumburg receives so much sales tax from Woodfield Mall that it has been able to operate its government without levying real estate taxes.

xvii.Repair Escrows

In some instances the seller of a piece of property is required to make improvements or repairs in the property before the sale closes. If the seller is required to place in escrow to be used by the buyer to make repairs or other improvements to the building, care should be taken to be sure that the amount of the escrow payment is deducted from the sales price for purposes of filing out the Illinois Revenue Department's Transfer Tax Declaration (green sheet). Neglecting to adjust the price shown on the green sheet can subject the party paying transfer taxes to an unnecessarily high tax and can result in unnecessarily high real estate taxes for the buyer for the next 3-5 years based on the sales tax reported to the state.

xviii.Amortization of Expenses

When calculating FMV using the income approach (see the Chapter above entitled "Finding Your Property's Fair Market Value"), watch for one‑time extraordinary expenses on the property owner’s income tax return. One‑time extraordinary expenses or capital expenses cannot be taken as an expense in one year. They must be amortized over a number of years.

xix.Environmental Hazards

If a property owner discovers a significant environmental hazard on his property and is financially unable to clean it up, he/she is still not likely to receive a reduction in real estate taxes. The owner should submit to the local assessing official a Phase I study and a Phase II corrective action plan. Even though realisitically a contaminated property would have a lower market value than a clean site, assessing officials will provide no relief until after the hazard is cleaned up and the reason for the lower value no longer exists.

If the owner is financially unable to fix the problem, it normally gets no tax relief.

xx.Interest Free Loan.

In that rare case where a consolidation or division of tax parcels has occurred, a brand new PIN or PINs will be issued. In these circumstances, the amount owed for the first installment will be $0 and the entire tax bill will be due at the time for the second installment. The reason for this is that the first installment is an estimated tax. It is calculated as 50% of the prior year's tax bill for the particular PIN. By definition, a newly created PIN had no tax the prior year, so 50% x $0 = $0.

If a property owner has a good reason to divide one land parcel into two parcels or alternatively a reason to consolidate two parcels into one Permanent Index Number (PIN), the by-product of this can be a 5-6 month interest free "loan" from the county.

37. C/E Tax Debt

Whenever a taxpayer receives a C/E, she should always look to see if any taxes are still owing. The safest course is to pay all taxes in the beginning when due and to seek a refund when and if the C/E is approved by the local assessing official and by the circuit court. Those taxpayers who reject this advice and who successfully obtain a C/E when it is adjudicated in their favor two or three years later will receie a reduction (but not elimination) of taxes due. They must pay whatever the balance turns out to be or become liable for substantial interest penalities and the probability that these delinquent taxes will be sold. This situation also occurs for those who request but are rejected for a C/E. They too have gambled. The best practice is to pay taxes when due to avoid unnecessary interest payments.

When a C/E is approved, the taxpayer should look at the "recommended balance due" on the C/E form returned to the taxpayer and pay that.

APPENDIX

Exhibit 1ASSESSMENT NOTICE

County	1985	1986	1987	1988	1989	1990	1991	1992	1993	1994	1995	1996
Cook	1.8085	1.8486	1.8916	1.9266	1.9133	1.9946	2.0523	2.0897	2.1407	2.1185	2.1243	2.1517
Lake	1.0000	1.0000	1.0000	1.0000	1.0252	1.0000	1.0000	0.9852	1.0000	1.0000	1.000	1.000

102	Counties
1,529	Townships and Road Districts
1,280	Municipalities
976	School Districts & Community Colleges
+2,161	Special Districts
6,048	Total Illinois Taxing Bodies

	ILLINOIS		ALL STATES
Source	$ Amount	% of Total	$ Amount	% of Total
Federal Funds	$ 890	4.5%	$ 17,589	3.8%
State Funds	$5,147	26.1%	$157,652	33.6%
Property Tax	$7,434	37.7%	$137,100	29.3%
Sales Tax	$1,475	7.5%	$ 19,183	4.1%
Other Taxes	$1,125	5.7%	$ 28,188	6.0%
Current Charges	$2,283	11.6%	$ 66,024	14.1%
Misc. Revenue	$1,384	7.0%	$ 42,807	9.1%
TOTAL	$19,738	100.0%	$468,549	100.0%
Source: Significant Features of Fiscal Federalism: 1991, Volume 11, Table 91, ACIR, 1991.

Revenue Needed by the Unit of Government Value of all Property Within the Unit’s Boundaries	=	Tax Rate
Tax Levy Total Assessed Value x Equalizer	=	Tax Rate
Tax Levy Total Equalized Assessed Value	=	Tax Rate
Example v $2 Million $100 Million	=	Tax Rate
2 = .02 = 2% 100	=	Tax Rate