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Grundy County Agricultural District Fair, Inc. v. Department of Revenue of the State of Illinois

March 16, 2004


[6] Appeal from the Circuit Court of the 13th Judicial Circuit Grundy County, Illinois No. 01-MR-46 Honorable Robert C. Marsaglia, Judge, Presining

[7] The opinion of the court was delivered by: Justice Lytton

[8]  Plaintiff, Grundy County Agricultural District Fair, Inc. (county fair), applied to defendant, Illinois Department of Revenue (department), for an agricultural property tax exemption for its fairgrounds for the year 1999. The department denied the exemption, finding that the fairgrounds were leased with a view to profit and that the grounds were not used exclusively for exempt purposes. See 35 ILCS 200/15-85 (West 2000). The county fair appealed the decision to the circuit court; the circuit court reversed the administrative decision. We reverse and remand, finding that neither the trial court nor the department used the proper test to determine the exempt status of the property.

[9]  The county fair owns fairgrounds consisting of about 90 acres of land. *fn1 Over the course of the year, the county fair leased the land on a short term basis to organizations which hosted various agricultural and non-agricultural events at the fairgrounds. For example, the leases ranged from one day sales events to automobile races which took place on eight different dates. The county fair used the proceeds from the leases to offset the cost of hosting the county's agricultural fair, an event which it coordinated and offered to the public free of charge.

[10]   The county fair applied for a tax exemption for the 1999 assessment year pursuant to 35 ILCS 200/15-85, which provides that "all property used exclusively by societies for agricultural or horticultural purposes, and not used with a view to profit, is exempt." To determine whether the property was exempt, the department used one test: counting the number of days the property was used for exempt purposes and for non-exempt purposes. The department denied the exemption because the grounds were used for agricultural events for 10 days and for non-agricultural events on at least 44 days.

[11]   Plaintiff appealed to the circuit court, arguing that it was a non-profit organization and the only reason it leased the property was to fund the county agricultural fair. The circuit court reversed the department's decision, finding that the use of the property for agricultural events was more "intensive" than for other events. The circuit court held that the "facility is constructed, maintained, and managed to support the annual County Agricultural Fair and the annual 4-H fair. All other uses are, in fact, incidental."

[12]   I. Standard of Review

[13]   In reviewing a final decision under administrative review law, we review the agency's finding, not the circuit court's determination. Metropolitan Airport Authority v. Property Tax Appeal Board, 307 Ill. App. 3d 52, 55 (1999). An agency's determination of fact will be disturbed only if it is against the manifest weight of the evidence. Abrahamson v. Illinois Department of Professional Regulation, 153 Ill. 2d 76, 88 (1992). Questions of law, however, are not entitled to deference and are reviewed de novo. Envirite Corp. v. Illinois Environmental Protection Agency, 158 Ill. 2d 210, 214 (1994). A case that involves the examination of the legal effect of a set of given facts is a question of mixed law and fact, and therefore should not be overturned unless clearly erroneous. City of Belvidere v. Illinois State Labor Relations Board, 181 Ill. 2d 191, 205 (1998).

[14]   II. Tax Exemption

[15]   Statutes imposing tax liability are generally construed against the state and in favor of the taxpayer. People Who Care v. Tax Objectors, 193 Ill. 2d 490, 496 (2000). However, statutory exemptions to taxation are strictly construed in favor of taxation. Central Illinois Light Co. v. Department of Revenue, 336 Ill. App. 3d 908, 913 (2003). The party seeking the exemption bears the burden of clearly and conclusively proving it is entitled to the exemption. Chicago Bar Association, 163 Ill. 2d at 300. All debatable questions must be analyzed in favor of taxation. Wyndemere Retirement Community v. Department of Revenue, 274 Ill. App. 3d 455, 459 (1995).

[16]   To qualify for tax exempt status under 35 ILCS 200/15-85, two criteria must be met: (A) the property must be used exclusively for agricultural or horticultural purposes and (B) the property cannot be used with a view to profit.

[17]   A. Exclusive Use

[18]   Property satisfies the exclusive use requirement if it is "primarily used for the exempted purpose" (emphasis in original). National Bus Service, Inc. v. Department of Revenue, 302 Ill. App. 3d 820, 825 (1998). If the non-exempt uses of the property are more than "merely incidental," the exemption must be denied. Streeterville Corp. v. Department of Revenue, 186 Ill. 2d 534, 536 (1999).

[19]   The department argues that its "number of days" analysis is a reasonable way to determine the primary use of property. While that analysis may be relevant, we do not believe that simply counting days should be the sole measure of ascertaining the primary use of property. Relying exclusively on one factor may result in an inaccurate or unrealistic finding of primary use.

[20]   Recently, in The Arts Club of Chicago v. Department of Revenue, 334 Ill. App. 3d 235 (2002), the court considered a tax exemption for property used for charitable purposes. The Arts Club submitted an application for tax exemption in 1995. The department denied the application, finding that the Arts Club did not use the property exclusively for exempt purposes. As in the instant case, the department used only one criterion to reach its finding. There, the test was how the greatest number of people used the property. The court reversed the department's decision, finding other factors relevant to the primary use, including the percentage of the property allocated and used for exempt purposes and the percentage of total visitors who use the premises for exempt purposes. ...

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