PTAB Rejects Motion to Dismiss School District Based on Refund Recapture

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PTAB Rejects Motion to Dismiss School District Based on Refund Recapture

Sep 20, 2022

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On September 13, 2022, the Property Tax Appeal Board (“PTAB”) rejected a taxpayer’s motion to dismiss a school district from a PTAB case based on the new refund recapture legislation.  In so doing, the PTAB, and taxpayers’ attorneys, provided insight into their current view of a taxing body’s role in the assessment appeal process. 

Under Illinois law, any taxing body that has a “revenue interest” in a PTAB appeal may intervene in the proceedings.  Once a taxing body intervenes, the taxing body has the same right to challenge, defend or settle a PTAB case as the taxpayer itself.  Oftentimes, county assessment officials lack the resources necessary to defend large assessment matters so taxing districts step into the shoes of the assessment officials and become the primary defender of the assessment being challenged.  

In 2021, Illinois created a refund recapture program allowing taxing districts subject to the Property Tax Extension Limitation Law (“PTELL”) to recoup revenue lost from PTAB reductions.  Each year through the tax extension process, county tax officials must increase all PTELL, i.e. “tax-capped,” districts’ levies by the amount lost in PTAB refunds.  

In the matter of Grand Tower Energy Center, LLC, a rural area’s largest taxpayer attempted to capitalize on the refund recapture amendment by using it to keep the school district out of the case, thereby eliminating the main obstacle that stood in the taxpayer’s way of achieving a massive property tax refund.  The taxpayer filed a PTAB appeal seeking a multi-million dollar tax refund of taxes for a power plant.  When the non-tax-capped school district intervened, the taxpayer filed a “Motion to Dismiss Intervenor.”  The taxpayer, failing to distinguish between PTELL districts and non-PTELL districts, claimed that Illinois taxing districts no longer have the requisite “revenue interest” sufficient to meet the standard for intervention.  The taxpayer argued that, due to refund recapture, PTAB refunds are “essentially, passed along to taxpayers in the subsequent year’s levy” and therefore PTAB proceedings are “revenue neutral to taxing bodies.” 

In rejecting the motion to dismiss, the PTAB accepted the School District’s argument that refund recapture did not apply because the school district was not tax-capped and therefore was not entitled to recapture revenue lost to PTAB refunds.  However, in denying the motion, the PTAB did not rule out granting such a motion in a situation where refund recapture actually applied.  Thus, PTELL taxing districts can expect to face similar motions and arguments in the near future.  Given the importance of participation by taxing districts at the PTAB level, taxing districts should be prepared to respond vigorously. 

Taxing districts have a recognized revenue interest in tax appeals because of the impact not only on tax funds available for the year in question but for other reasons including the overall effect on the tax base and the impact on residential taxpayers when large, commercial property owners receive reductions. When assessments are reduced, districts face shrinking tax bases that not only result in increased taxes for their remaining taxpayers but also impede their ability to provide funding for their staff, services, and constituents.  A taxing district’s interest in its tax base is longstanding and axiomatic in Illinois and the PTAB’s decision underscores the continued importance of taxing district involvement in the property tax appeal process. Please contact your Robbins Schwartz attorney with any questions.

Robbins Schwartz is developing model updates for Board policies to align with the new requirements and updates for parent/student handbooks to comply with the parent/guardian education and information requirements, which can be customized to your institution’s specific needs.  For more information, please contact any Robbins Schwartz Attorney.