By: Brittany Flaherty Theis

On November 28, 2017, the Third District Illinois Appellate Court filed a modified opinion in which it dismissed a taxpayer’s appeal regarding the denial of its general homestead property tax exemption application. Friendship Manor, Inc. v. Larry Wilson, 2017 IL App (3d) 160391. In Friendship Manor, the taxpayer is a not-for-profit corporation that operates a licensed care facility. Friendship Manor contracts with individuals to whom it provides housing, maintenance, and nursing, medical, or personal care services while residing at private, apartment-style homes at the facility. Friendship Manor pays the real property taxes for the property and then allocates a proportional amount to each residence. Historically, Friendship Manor applied for and received general homestead exemption and senior citizens homestead exemption for units within the property. The amount owed by each individual was adjusted based on whether or not the resident qualified for and received an exemption.

In 2014, however, the supervisor of assessments advised Friendship Manor that the facility did not qualify for exemption because it did not meet the requirements of Section 15-175(f) of the Property Tax Code. In response, Friendship Manor filed a nonfarm property valuation assessment complaint with the Rock Island County Board of Review. While that was pending, Friendship Manor also filed a complaint for declaratory relief. Ultimately, the circuit court entered a judgment in favor of the supervisor of assessments (and a school district that intervened), and Friendship Manor appealed. The Illinois Appellate Court dismissed the appeal.

In dismissing the appeal, the court explained that although, generally, the “existence of another remedy will not preclude bringing a declaratory judgment action,” declaratory relief is not available in revenue cases if the statute provides an adequate remedy. “With respect to property tax, the general rule is that a taxpayer is limited to first exhausting administrative remedies provided by statute beginning with the Board of Review – the remedy at law for an incorrect assessment – before seeking relief in the circuit court. The taxpayer then has the option of either appealing to the Property Tax Appeal Board or filing a tax objection complaint in circuit court. Thus, the adequate remedy at law is to pay the taxes under protest and file a statutory objection.” The exception, which applies to taxpayers who may seek equitable relief when a tax is unauthorized by law, did not apply.

Therefore, the court required Friendship Manor to exhaust its administrative remedies by appealing the supervisor of assessment’s decision to the Board of Review, before filing an action in circuit court. The court held that it, and the circuit court, lacked jurisdiction and dismissed the appeal.

Attorneys at Whitt Law have significant experience reviewing applications for property tax exemption on behalf of taxing bodies, as well as preparing applications for property tax exemption for property owned by their clients. Please contact Whitt Law Partner Joshua Whitt if you have questions regarding the ways in which Whitt Law can assist your taxing body in fairly defending its tax base. Please contact Whitt Law Attorney Brittany Flaherty Theis if you have questions regarding this case.

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