Appeals panel: Cook County can go back three years to grab taxes for improper homestead exemptions

A state appellate panel has upheld a lower court ruling that the Illinois Property Tax Code allows the Cook County Assessor’s Office to reach back three years, to claim unpaid taxes on a south suburban house that had an invalid homestead exemption.

The March 16 decision was rendered by Justice Margaret McBride of the Illinois First District Appellate Court, with concurrence from Justices David Ellis and Eileen O’Neill Burke. The decision favored the Cook County Assessor’s Office in its dispute with homeowner Barbara R. Mulry.

Mulry inherited a house, adjacent to her home in Evergreen Park, from her late uncle. She had a homestead exemption for her house, but said she did not know her uncle had also had one for his home, which remained in place after his death. Mulry said she never lived in the inherited house, but rather rented it out.

To qualify for a homestead property tax exemption, a house must be the owner’s primary residence. Other exemptions are given to homeowners with other demographic and legal qualifications, including senior citizens, military veterans and long-term occupants.

In 2014, the assessor’s office told Mulry she had not been entitled to an exemption on the inherited house for 2010, 2011 and 2012. As a consequence, they billed Mulry for $4,188 in unpaid taxes and interest, according to the assessor.

The assessor relied on the “Erroneous homestead exemptions” section of the Illinois Property Tax Code, which the General Assembly adopted in 2013. The section sets out procedures for the Cook County assessor to use in recouping unpaid taxes, with 10 percent annual interest, when the assessor determines an exemption has been wrongly granted. The section also allows for the imposition of liens and 50 percent penalties.

Mulry contested the tax bill at an administrative hearing in May 2014, claiming the 2013 statute could only be employed from the date of its enactment forward. Instead, Mulry alleged the assessor was retroactively applying the law, violating her due process.

At the hearing, the assessor introduced computer printouts of assessor records, to show Mulry enjoyed exemptions for two properties. Mulry’s attorney objected to the printouts, contending computers were not trustworthy for keeping records. The administrative hearing officer rejected the contention, allowed the printouts and ruled Mulry owed the money.

Mulry then went to Cook County Circuit Court, to have a judge review the case. However, Mulry again struck out, as Judge Sharon Sullivan affirmed the hearing officer’s decision. Mulry continued fighting, taking the case to appellate court, but again losing.

Mulry argued legislators did not intend for the erroneous exemptions statute to be retroactive from the date it was enacted. Appellate Justice McBride did not buy the argument.
“Mulry misconstrues the significance of a statute’s effective date, which is simply the date that legislation takes effect or, in other words, becomes governing law. A statute’s effective date is not enough to tell us about the General Assembly’s intended temporal reach of this enactment. The ‘traditional rule’ is that statutes do not apply retroactively unless the legislators have expressly stated this temporal reach,” McBride said.

McBride went on to point out the statute’s language “clearly and unequivocally” permits the assessor to take action against improper exemptions “during any of the 3 collection years immediately prior to the current collection year.”

McBride further noted the 2013 statute does not “attach new consequences to prior conduct,” because McBride should never have had simultaneous exemptions on two properties in the first place.

In addition, McBride disagreed with Mulry’s stance the three-year retroactivity was “harsh and oppressive,” noting the Tax Code gives the state 20 years to collect delinquent taxes and 20 years for a Cook County taxpayer to request a refund when they have overpaid.

McBride deleted Mulry’s other contention the assessor’s computer printouts did not constitute bona fide records. In advancing this argument, Mulry cited cases that were decades old, including one from 1969, in which computerized record keeping was questioned as a reliable method of maintaining records.

McBride dismissed the case law as out-of-date, because digitalized record keeping is now “ubiquitous and routine.”

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