​Thank you to IREM for allowing us to our partner, Michael Elliott, speak on the latest challenges and trends for commercial property owners and managers as it relates to property taxes. 

Understanding the complicated property tax laws and preparing a strategic appeals plan are two factors needed by commercial property owners and managers to successfully appeal tax assessments in Cook County. Earlier today, Michael J. Elliott, founding partner of the
Elliott & Associates Attorneys, P.C., shared that advice during an informative webinar, “Financial Self Defense,” hosted by IREM Chicago. More than 25 members, Industry Partners and guests participated in the webinar. Mr. Elliott shared a wide range of insight and information, including thoughts on a Chicago Tribune and Pro Publica investigative report called “The Tax Divide,” appeals practices through the office of current Cook County Assessor Fritz Kaegi, the impact of the COVID-19 pandemic, property appraisals, and relevant upcoming legislation in Springfield. He also cited seven ways to win a tax appeal – with one factor being patience. ​

You may receive a notice from the Assessor stating that your assessment is being reduced due to COVID but that may not mean a reduction in your tax bill. Why? Read the full Crain's article here. 
 
UPDATED 11/19/2020 – If you are not a Crain’s member, Alby Gallun, the author of the article, also was interviewed in a podcast. You can click here to listen. 

Leading Lawyer magazine names Elliott & Associates partner Mike Elliott #5 Real Estate Tax attorney in Illinois and #3 in the Suburban Real Estate category.

Question:  
​You filed an appeal on my property and the assessment was reduced, buy my tax bill is higher than last year.  Where are the savings?

Answer:
​When your assessment is reduced because of a tax appeal, your taxes before exemptions will always be less than what they would have been had there been no reduction. You cannot see the savings by comparing this year’s bill to last year’s bill. You see the savings by comparing this year’s bill to the bill you would have received had your assessment not been reduced. 

​Your taxes are determined by the: assessed value, state equalization factor, and local tax rate.
 
Months before you received your bill, the Assessor placed an assessment on your property.  In a reassessment year, an assessment notice was mailed to you.
 
You contested that assessment and caused it to be reduced. The reduced assessment appeared on your tax bill and was used to compute your taxes.
 
But, since you won your appeal, you never saw the bill that would have been issued had the original assessment not be lowered.
 
The bill you received included the reduced assessment and not the original  Here’s what an actual tax bill looks like and  what the bill would have looked like had there been no assessment reduction.

​As you can see, the actual tax was lower than the tax that would have been billed had no reduction been obtained. That’s the savings.          
 
There are several factors that could have caused this year’s real estate tax bill to be greater than last year’s.

1. Equalizers and tax rates vary from year to year but tend to increase over time.
   
   1. This year’s equalization factor may have been higher than last year’s.
      
   2. This year’s tax rate could have been higher than last year’s.
2. Even if there was an assessment reduction, this year’s assessment may have been higher than last year’s assessment.

 
The tax savings that you realize because of an assessment appeal is the difference between the actual taxes billed and the taxes that would have been billed had no reduction been obtained. It is not the difference between this year’s taxes and last year’s taxes. 

Question: 
If Elliott appeals my assessment and wins, will my tax bill be less than last year?
 
Answer:
Not necessarily.  But, in nearly all cases, if we file a tax appeal for you and win, your taxes will be less than otherwise and you will save money.
 
Here’s why.      
 
Your taxes are based on:

1. Your current assessment
2. The county equalization factor,
3. Your local tax rate, and
4. Any exemptions you are entitled to receive as a homeowner.
                  

If we file an appeal for you and win, your assessment will be reduced.  And, that reduced assessment will be reflected on your next tax bill. 
               
If the originally proposed assessment were reflected on your bill, your taxes (before exemptions) would be higher.                

The difference between the taxes based on the original assessment and the final one because of the appeal we filed is the tax savings. 
 
Your tax bill following a successful appeal could be more or less than the prior year.  Why?   

• Even though your assessment was reduced this year, it could be higher than last year.             

• The county equalization factor changes each year and tends to rise over time.  The tax rate reflects local government spending that increases over time causing rates to go up.  On the other hand, increasing property values can put downward pressure on tax rates.  So, tax rates change each year.       

• And, finally, the value of the exemptions you receive each year can change.

 
The savings you realize from a tax appeal is not computed by comparing this year’s bill to last year’s because there are other factors that change from year to year that affect your bill.  The savings you realize from a tax appeal is the difference between the taxes you would have owed had no appeal been filed and the taxes you will owe following the appeal. 

Question:
Elliott & Associates is pursuing a tax appeal for me.  Should I pay my tax bill?

Answer: 
Yes, you should pay your tax bill even though you have an appeal pending.  Here’s how the appeal process affects your tax bill.     
 
In Illinois, property taxes are paid in arrears.  That means taxes for a particular year are paid the next year.  
 
In Cook County, taxes are payable in two installments.  The first installment is 55% of the prior year’s tax bill and is basically a down payment on what you will eventually owe for this year.  So, you need to pay your 1st installment bill regardless of whether a tax appeal is pending.               
 
After all appeals have been concluded, 2nd installment tax bills will be computed and issued.  The 2nd installment bills are usually mailed around July 1st and due August 1st.  The 2nd installment bill will reflect any assessment reduction we obtain for you.  If your assessment is reduced, your 2nd installment bill will be smaller than otherwise.              
 
Your 2nd installment bill will include a credit for the amount you paid for the 1st installment and you will be billed for the balance due.         
 
Outside of Cook County, tax bills are not issued until all appeals have been concluded.    Then, the taxes are computed and will reflect any assessment reduction we obtain for you.  The bills are usually mailed in mid-April and payable in two installments of 50% each.  There is no estimated 1st installment bill as there is in Cook County.
 
So, regardless of whether your property is located in Cook County or elsewhere, you must pay each tax bill when it due regardless of whether a tax appeal is pending.  If you fail to do so, interest will accrue at the rate of 1-1/2% per month.

Question: 
Why does my tax bill rise each year? 

Answer:
Tax bills can rise over time even when you diligently contest your assessment.  But, if you don’t contest your assessment, the tax increases will be even greater. 

Here’s why.
                                                                                                                         
Property taxes are directly impacted by local government spending.  If you review your tax bill, you will see all the governmental agencies that levy a tax on your property.     
                                  
The more these agencies spend, the greater the tax they take from property owners like you.   
  
The amount government  takes from you is reflected on your tax bill in the tax rate.  The higher the spending, the higher the tax rate and the more you will owe.          
                                                
Many governmental agencies are limited by law as to how much they can take from property owners each year.  These limitations are known as tax caps.  Tax caps limit tax levies from increasing from year to year by more than the rate of inflation ---which has been about 2% to 3% per year recently.  
             
But, other agencies are not limited by tax caps and they can take whatever amount they wish.    
In the final analysis, you can expect tax levies to increase at least 2% to 3% each year because of increases in government spending.    
                                                                                                     
So, even if you keep your property assessment under control, increases in spending could cause your  tax bill to grow over time.                                                                                                                          
But, if you don’t contest your assessment, the situation will be even worse as a higher tax rate will be applied to a higher assessment causing an even higher tax bill.

Question: 
How is my tax bill calculated? ​

Answer:
Your tax bill is based on your current assessment, current equalizer, current tax rates and any exemptions you are entitled to as a homeowner.
 
Here’s how the bill is computed:            

1. Your tax bill reflects the current assessment of your property.  If an appeal was filed– and if you won that appeal – the reduced assessment will appear on your tax bill. 
2. The assessment is multiplied by the County equalization factor to arrive at the equalized assessed value of your property, or the EAV.  This is also known as the taxable property value.            
3. The EAV is multiplied by the local tax rate to determine the gross tax due.       
4. If you are a homeowner, you may be entitled to receive exemptions. 

     5.  Exemptions are then deducted from the gross tax to arrive at the net tax due.

Question:
Why did I get a one-year assessment reduction?

​Answer: 
Assessment reductions are generally awarded for multiple years.  But, occasionally they may be awarded for one-year only.  And, that is not necessarily a bad thing.  Here’s how one-year reductions work and why they may actually be a good thing.
 
Property in Cook County is assessed triennially, meaning once every 3rd year.  Once an assessment is reduced, that reduction will typically remain in place for all 3-years of the assessment cycle.   
 
Outside of Cook County, property is assessed quadrenially, or every 4th year and any reduction should benefit the taxpayer for the remainder of the assessment cycle, and maybe longer.  That’s because the Assessor adjusts assessments each year by a percentage called a factor.  Factors reflect changes in real estate values in the local community.  So, when an assessment reduction is awarded one year, it carries forward to all future years of the same assessment cycle because the factor is applied to the reduced assessment rather than the originally proposed/higher one. 
 
In Cook County, the Assessor and Board of Review sometimes mark their reductions as one year only.  In those cases, the assessment the following year will be increased to the original level (before the reduction) and the taxpayer will need to appeal again.       
 
The Cook County assessing officials tend to issue one-year reductions when property has

• high vacancy,
• unusually low rental income,
• unusually high expenses, or
• the building was constructed or demolished during the tax year.          

 
One-year assessment reductions can be substantial and the assessment will often be reduced well below the level of the prior year.            
 
The assessing officials tend to award one-year reductions to help taxpayers who are suffering financially.  But, they require the taxpayer to appeal again the following year to prove the hardship continues to exist.              

Multi-year reductions, on the other hand, tend to be less dramatic.   Usually, an assessment increase is reduced or eliminated and the reduction will carry forward to the rest of the assessment cycle.   
 
One-year assessment reductions often occur in Cook County.  And, are a good thing because the assessment is often reduced much more than it would have been had a multiple year reduction been awarded.

Question:
Why do PTAB appeals take so long and what does Elliott & Associates do to speed up the process?
​
Answer: 
PTAB cases can take a year or two or more to resolve.   Here are some of the things that cause those delays and what we can do to speed up the process.            
 
The Property Tax Appeal Board has a defined process for handling cases.  In a best-case scenario, PTAB cases can be resolved in under 12 months.            
 
Unfortunately, several years ago, PTAB experienced devastating budget cuts that forced them to reduce staff.  As a result, fewer cases got resolved each year and the backlog of PTAB cases grew dramatically.             
 
PTAB’s budget has been restored and it has hired additional staff.  And, PTAB has been encouraging taxpayers and assessing officials to settle cases.  This has caused the PTAB backlog to start shrinking.   
 
PTAB cases for Cook County properties are processed separately from the rest of the State.  And, since more cases are filed for Cook than elsewhere, the Cook County backlog is greater. 
 
Here are some of the things Elliott & Associates does to streamline the process.           

• For Cook County properties, we generally appeal to Court rather than PTAB unless there is an overwhelming reason why the case would be more winnable at PTAB.  This is because Cook County Court cases are usually resolved faster than Cook County PTAB cases.            
• Whenever possible, we submit all evidence with our PTAB appeals rather than requesting a continuance and submitting evidence at a later date.  This can shave about 6-months off the process.          
• We file appeals to the Board of Review in subsequent years.  In most Counties, this will create an opportunity to discuss settling pending cases.
• We pressure the County and interveners to settle pending PTAB cases.             
• We waive trial, when appropriate, and ask PTAB to decide the case on the evidence - because it can take a long time to get a trial date.  Cases where trial is waived get resolved sooner. 

 
There are often good reasons why it makes sense to file an appeal to PTAB rather than Court.  And, while PTAB cases may take longer to resolve, you may be rewarded for the wait.  But, it is important that your attorney knows how to work the PTAB system to streamline and shorten it as much as possible.