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Many residents of Illinois may find themselves in the unenviable position of paying taxes multiple times (such as escrow or other errors) or overpaying their property taxes due to unclaimed exemptions. There is a way to attempt to recover these funds as a refund for the overpayment of taxes. In this article, we will be discussing the process to claim these overpayments, and the time period a taxpayer generally has to seek these refunds.  

What is a Refund in Illinois?

As used in the tax context, a refund is an amount a taxpayer or reporting entity would receive from the government due to an overpayment of taxes. Overpayment of taxes can happen in several ways: voluntary overpayments, double assessments, double or more payments, mistakes in payment (i.e., the taxpayer paid and their mortgagor paid via escrow), etc. If there is an overpayment in the taxes, the taxpayer can seek a refund by contacting their county treasurer to discuss the overpayment. If the treasurer and the taxpayer can agree on the overpayment, this would be the quickest way to achieve an amicable refund. However, if there is a dispute on overpayment, the taxpayer can ask for a Court of competent jurisdiction to oversee the issue. If the taxpayer wins, the Court "shall direct the county collector to refund the taxes." 35 ILCS 200/20-175.  

It is important to note how long this last exists. There are two time periods: Cook County and all other counties.    

What is the Time Period?

For people outside of Cook County, this right has existed for up to 5 years. The right to request this refund accrues to the taxpayer at the time of payment or overpayment. This means that for overpayments made before 2016 for the 2015 tax year, most taxpayers will not be able to receive a refund for those payments. For instance, if a person received notice of an overpayment in November of 2020 and decided to do something in February of 2021, the most this taxpayer can recover is from February 2016 onwards.  

For people in Cook County, this right has existed for 20 years. The legislature made a relatively recent change effective January 1, 2015. It is an open question whether the statute could survive. However, there is a good argument for its survival. The question that needs to be answered is whether the legislature has indicated the temporal reach of an amended statute: Caveney v. Bower, 207 Ill. 2d 82, 91 (Ill. 2003). If so, absent a constitutional prohibition, that expression of the legislature must be given effect. Id. If the amendatory act does not indicate a legislative intent to apply retroactively, then the provisions of 5 ILCS 70/4 (retroactive application of laws) would apply. Id at 95. In this situation, both the State Senate and the State House of Representatives foresaw the backdating of the policy. Debate on Senate Bill 2854, 103rd Legislative Day, Regular Session, (April 1, 2014) (Senator Jones) ("Senate Bill 2854 amends the Property Tax Code and extends the statute of limitations to claim a property tax refund in Cook County from five years to twenty years.  

However, the treasurer can only issue a 2.5-million-dollar refund for claims that arose – before January 1 of 2009.”); See also, Debate on Senate Bill 2854, 141st Legislative Day (May 29, 2014). As a result, it is relatively straightforward that the legislature intended the law to apply retroactively concerning Cook County.  

What is the Voluntary Paid Doctrine?

Once the time described above runs out, a taxpayer who overpays their tax bill cannot recover a refund. Under Illinois law, this is called the voluntarily paid doctrine. Under this doctrine, even if the taxing body imposed or assessed the taxes illegally, a taxpayer is unlikely to be able to recover them unless this recovery is authorized by statute. Alvarez v. Pappas, 229 Ill. 2d 217, 221 (Ill. 2008). "It has been a universally recognized rule that money voluntarily paid under a claim of right to the payment and with knowledge of the facts by the person making the payment cannot be recovered back on the ground that the claim was illegal. It has been deemed necessary not only to show that the claim asserted was unlawful, but also that the payment was not voluntary; that there was some necessity which amounted to compulsion, and payment was made under the influence of such compulsion.'" Getto v. City of Chicago, 86 Ill. 2d 39, 48-49 (Ill. 1981), quoting Illinois Glass Co. v. Chicago Telephone Co., 234 Ill. 535, 541 (1908).    

As a result, if you believe you overpaid property taxes in Illinois or if you qualified for an exemption, but it was not applied to your property properly, please give us a call at 630-324-6666 to speak with one of our attorneys concerning your options.

Posted 
July 26, 2022
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