By: Brittany Flaherty Theis
In August, the Fifth District of the Illinois Appellate Court published an opinion in a property tax dispute regarding a manufactured home in Franklin County, Illinois. The case involved a manufactured home and changes in the Property Tax Code effective January 1, 2011.
Specifically, prior to January 1, 2011, mobile homes were taxed as real property only if they were resting on permanent foundation. Public Act 96-1477 (the “Act”), however, removed the distinction between mobile homes resting on permanent foundations and those not. Effective January 1, 2011, the new law provides that all mobile homes and manufactured homes installed outside of mobile home parks on or after the Act’s effective date are to be assessed and taxed as real estate. The Act also contains a grandfather clause, which provides that mobile homes and manufactured homes that were taxed as personal property on the effective date of the amendment will continue to be taxed as personal property until they are sold or transferred or moved to a different location outside of a mobile home park.
The home at issue was placed on property in Franklin County in May 2010 and received electric service and water service by July 2010. The home was placed on blocks with hurricane straps, rather than a permanent foundation. The local assessor learned of the improvements in 2011 and (upon mistaken belief) assessed the manufactured home as a “stick-built” house subject to taxation as real property. The owner of the manufactured home (the taxpayer) appealed the assessment. The original assessment was affirmed by the Franklin County Board of Review, the Illinois Property Tax Appeal Board, and the circuit court, despite the grandfather clause in the Act. All three found it significant that the taxpayer had not registered the manufactured home as required by the Act. The appellate court was not persuaded that the case should hinge on the taxpayer’s failure to register and reversed.
The appellate court explained that the Act enacted or amended three statutes: the Manufactured Home Installation Act, the Property Tax Code, and the Mobile Home Tax Act. It compared the statutes and stated that all three provide that:
- mobile homes and manufactured homes that were taxed as real property before the new law went into effect will continue to be taxed as real property; and
- mobile homes and manufactured homes that were taxed as personal property under the Mobile Home Tax Act prior to the effective tax of the new law will continue to be taxed as personal property.
Further, the Manufactured Home Installation Act provides that all mobile homes and manufactured homes installed on private property that is not in a mobile home park on or after January 1, 2011, must be taxed as real property. None of the statutes, however, address the situation where a mobile home or manufactured home is installed prior to January 1, 2011, but was not taxed or assessed under either provision of the old law because it was installed after local assessments for the year were complete – as occurred in this case. Additionally, a memorandum by the Department of Revenue regarding the implementation of the Act stated that mobile homes that were not on the 2010 tax rolls should be treated the same way similar mobile homes that were on the tax rolls were treated.
Based on a review of the parties’ arguments and testimony, relevant case law, and the Department of Revenue’s memorandum, the appellate court determined: (1) that the subject property was not on the 2011 tax rolls because it was installed too late to be assessed in time; and (2) that taxing the manufactured home as real property merely because the taxpayer failed to register under the Mobile Home Tax Act would be an arbitrarily harsh penalty under these circumstances. The appellate court reversed the Property Tax Appeal Board’s opinion upholding the assessment as real property and finding decisive the fact that the taxpayers failed to register their manufactured home.
The attorneys at Whitt Law have decades of experience advocating before local boards of review, the Illinois Property Tax Appeal Board, and Illinois courts. Several attorneys with the firm are also familiar with issues impacting mobile home and manufactured home owners and communities, as well as the municipalities where they are located. For questions regarding this case, please contact Whitt Law Attorney Brittany Flaherty Theis. For information regarding how Whitt Law may be able to assist you with property tax assessment appeals, please contact Whitt Law Partner Joshua S. Whitt. For information regarding how Whitt Law may be able to assist your mobile home or manufactured home community, please contact Whitt Law Partner James R. Dougherty.