January 25, 2016
State Laws You Should Know
Interest Paid on Certificates of Error
Bill Ward, Executive Vice President, HBAI
In 1996, Lou Stephens, a builder from South Cook County, attempted to do the impossible; obtain repayment from Cook County on a property tax that was grossly over-assessed. In the first year, he failed. He attempted a second time in 1997 and did receive a Certificate of Error reducing his taxes from $99,300 to $41,500.
Mr. Stephens assumed his problems were over and he would soon be receiving his $57,800, but his journey had only just begun.
Once a “C of E” is received in the County of Cook, a Circuit Judge must review the case prior to actual payment. Judges were not reviewing certificates at this time and no longer wanted to review them at all. The backlog was estimated to be 5 years by the Assessor’s office and could take as much as 10 years to process.
Through our offices here in Springfield, and with the help of legislators, lobbyists, and other local officials, we managed to retrieve the taxes owed Lou Stephens.
Upon receiving a phone call from the Assessor’s office stating his money was forthcoming, Stephens asked the administrator on the call, “Are you going to pay the interest on the money you’ve held for the past three years?” The response went something like this: We don’t pay interest on back taxes owed, maybe you’d like to change the state law; and then you could get interest on the money owed. Lou said he’d try, and the administrator said, “Good luck with that!”
But this was now 1999, and the Assessor’s office was no longer dealing with just Lou Stephens of Stephens & Hayes Construction; they were now talking to Lou Stephens, Senior Vice President and Chairman of the Legislative Affairs Committee for the Home Builders Association of Illinois. According to Lou, interest was owed and the Legislative Affairs Committee concurred as well as the HBAI Board of Directors.
On January 27, 1999 State Senator Pat O’Malley introduced SB35, a bill to refund property taxes with interest when a Certificate of Error has been issued. The bill also eliminated judicial review for taxes owed of $100,000 or less.
With Lou Stephens in the room, Senator O’Malley met with the Assessor’s office and asked a simple question: “What happens when property owners do not pay their property taxes.” Answer: “They can be taken to court, forced to pay the taxes, pay interest, and pay a fine to the county.”
Question: “What happens when the Assessor’s Office over assesses a parcel of land and forces a higher tax than that which is warranted.” Answer: “Nothing.” Senator O’Malley then said, “This is going to change.”
It took a couple of amendments, some bickering, and a lot of lobbying, but in the end, language emerged from the Illinois General Assembly giving property owners interest on property taxes owed them that was certifiably deemed to be in error.
35 ILCS 200/20-178.
Certificate of Error; refund; interest. When the county collector makes any refunds due on certificates of error issued under Sections 14-15 through 14-25 that have been either certified or adjudicated, the county collector shall pay the taxpayer interest on the amount of the refund at the rate of .5% per month.
No interest shall be due under this Section for any time prior to 60 days after the effective date of this amendatory Act of the 91st General Assembly. For certificates of error issued prior to the effective date of this amendatory Act of the 91st General Assembly, the county collector shall pay the taxpayer interest from 60 days after the effective date of this amendatory Act of the 91st General Assembly until the date the refund is paid. For certificates of error issued on or after the effective date of this amendatory Act of the 91st General Assembly, interest shall be paid from the 60 days after the certificate of error is issued by the chief county assessment officer to the date the refund is made. To cover the cost of interest, the county collector shall proportionately reduce the distribution of taxes collected for each taxing district in which the property is situated.
The law does not apply to certificates of error granting homestead exemptions and other similar exemptions.
The “Lou Stephens Act,” as we like to call it, passed in the Senate on a unanimous 59-0 vote. Republican Rep. Bob Biggins, of DuPage County, took sponsorship in the House; he received a 116-0-1 vote on May 5, 1999. Governor George Ryan signed the bill (Public Act 91-393) in the summer of 1999.
Lou Stephens was elected President of the Home Builders Association of Illinois in 2000 and was inducted into the HBAI Housing Hall of Fame in 2008. Way to Go, Lou.