America's Property Tax Advisor

Illinois Bill Allows Recapture for
Property Tax Refund


The Illinois General Assembly approved legislation that gives local tax districts the ability to make up lost funds from refunds issued in tax appeals.


If Governor J.B. Pritzker signs the measure into law, critics say it will lead to across-the-board property tax increases annually. All taxpayers will ultimately be paying for the refunds that were issued from prior year appeals to some property owners.


Senate Bill 508


SB 508 creates a new section 18-233 in the state Property Tax Code. It provides that starting with the 2021 tax year, a taxing district’s levy “shall be increased by a prior year adjustment” whenever there is an assessment decrease due to certificates of error, a court order in a tax objection complaint, or a final decision of the Property Tax Appeal Board.


The concept of a refund recapture levy has been debated by Illinois lawmakers for several decades without success. Section 18-233 would make the recapture levy an automatic step undertaken by the local county clerk.


Financial Impact


The legislation requires county treasurers to issue a report by November 15 listing the amount of refunds their local taxing bodies made due to successful assessment appeals, including any back interest that was paid. The losses can be recouped the following year with the amount tacked onto the basic tax levy, regardless of whether it exceeds the limits of 3% or the rate of inflation under the state’s Tax Extension Limitation Act.


In Cook County alone, refunds issued by local taxing bodies during the 2020 calendar year in categories covered by the legislation totaled $176.3 million. This amount is relatively equal to annual refunds issued since 2015, based on statistics the Chicago Tribune obtained through the Freedom of Information Act. This means budgets could automatically be increased by hundreds of millions of dollars.


Proponents believe the legislation would put more pressure on assessors to deliver more accurate assessments. However, opponents contend it allows taxing districts to collect money that never truly existed because the assessments were erroneous. Therefore, it shifts the tax burden onto other property owners to make up for assessment mistakes.