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Cuevas v. Berrios

Court of Appeals of Illinois, First District, Sixth Division

March 31, 2017

DANIEL CUEVAS, Plaintiff-Appellant,
v.
JOSEPH BERRIOS, in His Official Capacity as Assessor of Cook County; and THE DEPARTMENT OF ERRONEOUS HOMESTEAD EXEMPTION ADMINISTRATIVE HEARINGS, Defendants-Appellees. DANIEL CUEVAS, Plaintiff-Appellee,
v.
JOSEPH BERRIOS, in His Official Capacity as Assessor of Cook County; MARIA PAPPAS, in Her Official Capacity as Treasurer of Cook County; DENNIS MICHAEL FLEMING, in His Official Capacity as Administrative Law Judge; and THE DEPARTMENT OF ERRONEOUS HOMESTEAD EXEMPTION ADMINISTRATIVE HEARINGS, Defendants-Appellants.

         Appeal from the Circuit Court of Cook County, Illinois Appeal No. 1-15-1318 No. 15 CH 2321 The Honorable Mary Lane Mikva, Judge Presiding.

         Appeal from the Circuit Court of Cook County, Illinois Appeal No. 1-16-0602 No. 15 CH 169 The Honorable Peter Flynn, Judge Presiding.

          JUSTICE DELORT delivered the judgment of the court, with opinion. Justices Cunningham and Rochford concurred in the judgment and opinion.

          OPINION

          DELORT JUSTICE

         ¶ 1 Illinois law allows property owners to claim a partial exemption, commonly known as the "homestead exemption, " from real estate taxes for their primary residence. Plaintiff Daniel Cuevas claimed homestead exemptions on 11 different properties which he owned in Cook County. Only one of those properties was his principal residence. The county assessor, defendant Joseph Berrios, convened an administrative hearing to determine the relevant facts regarding Cuevas's exemptions and the amount he might owe due to any improper exemptions. The Department of Erroneous Homestead Exemption Administrative Hearings (DEHE) determined that Cuevas improperly took exemptions on 10 of the 11 properties and that he owed $91, 984.85 for back taxes, penalties, and interest for tax years 2007 to 2012.

         ¶ 2 Cuevas filed two lawsuits challenging this action. In case No. 15 CH 2321 (the class action case), the circuit court upheld the legality of the administrative hearing process and the underlying statute against a host of challenges asserted by Cuevas. Cuevas also filed an administrative review case, No. 15 CH 169. In that case, the circuit court reversed the DEHE's determination that Cuevas was responsible for back taxes for the 2007 tax year. We affirm the circuit court's judgments in both cases.

         ¶ 3 BACKGROUND

         ¶ 4 In 2013, the General Assembly adopted section 9-275 of the Property Tax Code (35 ILCS 200/9-275 (West Supp. 2013)), which creates a process by which Cook County can recover delinquent taxes owed by taxpayers who improperly claimed homestead exemptions. Pub. Act 98-93 (eff. July 16, 2013) (adding 35 ILCS 200/9-275). To that end, the law requires the Cook County assessor to include certain admonitions in his periodic assessment notices to taxpayers, including a list of any homestead exemptions taken for the subject property, the eligibility requirements for homestead exemptions, and "information regarding penalties and interest that may be incurred" due to an erroneous exemption "in a previous taxable year." 35 ILCS 200/9-275(b) (West Supp. 2013).

         ¶ 5 Section 9-275(l) also required the assessor to establish an "amnesty period, " running from July 16, 2013 to December 31, 2013. 35 ILCS 200/9-275(l) (West Supp. 2013). During that period, taxpayers who claimed improper homestead exemptions for "tax year[s] prior to the 2013 tax year" were allowed to pay their delinquent taxes without interest or penalties. Id. The law granted those taxpayers a benefit in return. The Cook County clerk was to "abate and not seek to collect any interest or penalties that may be applicable and shall not seek civil or criminal prosecution for any taxpayer for tax years prior to 2013." Id. However, taxpayers such as Cuevas who had claimed three or more improper homestead exemptions were not eligible for the amnesty program. Id.

         ¶ 6 Since its original enactment in 2013, section 9-275 has been amended five times. See Pub. Act 98-756, § 195 (eff. July 16, 2014); Pub. Act 98-811, § 5 (eff. Jan. 1, 2015); Pub. Act 98-1143, § 5 (eff. Jan. 1, 2015); Pub. Act 99-143, § 325 (eff. July 27, 2015); Pub. Act 99-851, § 5 (eff. Aug. 19, 2016). The version of section 9-275 at issue here allows the assessor, after giving prior notice, to place tax liens against real estate owned by persons who claimed more than one homestead exemption. 35 ILCS 200/9-275(c) (West Supp. 2013). The assessor must give affected owners advance notice of his intent to lien their properties. Section 9-275(c) classifies these taxpayers into two groups. The first group includes taxpayers who claimed one or two improper exemptions during any of the "3 assessment years immediately prior to assessment year" in which the assessor issues the pre-lien notice. Id. For these taxpayers, the proposed lien amount includes only the omitted taxes and 10% annual interest. 35 ILCS 200/9-275(f) (West Supp. 2013). As noted above, taxpayers in the first group could take advantage of the amnesty period. The second group includes taxpayers such as Cuevas, who claimed three or more erroneous homestead exemptions during the preceding six assessment years. 35 ILCS 200/9-275(c) (West Supp. 2013). For this group, the proposed lien amount also includes a penalty of 50% of the omitted taxes on the subject property. 35 ILCS 200/9-275(f) (West Supp. 2013). Property owners who receive a pre-lien notice may contest it within 30 days of service by requesting a hearing before an independent hearing officer appointed by the assessor. 35 ILCS 200/9-275(e) (West Supp. 2013). Section 9-275(e) provides that the hearing officer's decision is subject to review under the Administrative Review Law (735 ILCS 5/3-101 et seq. (West 2014)).

         ¶ 7 If the owner does not request a hearing or does not prevail at the hearing, the assessor may record a lien against the property in the above-described amounts. 35 ILCS 200/9-275(f) (West Supp. 2013). When the lien is paid, the assessor releases the lien, the portion of the proceeds attributable to delinquent taxes are paid to the various taxing agencies, the interest is paid to the county, and the penalties are paid to the assessor to offset administrative costs. 35 ILCS 200/9-275(k) (West Supp. 2013).

         ¶ 8 On or about May 27, 2014, the assessor sent Cuevas notices of intent to record a tax lien on 11 different properties. Cuevas requested a hearing pursuant to section 9-275(f). On December 4, 2014, after a hearing, the DEHE hearing officer issued a written order finding that Cuevas took improper exemptions on the 10 properties at which he did not reside and found him liable under section 9-275. This order resulted in an aggregate amount due of $91, 984.85, including taxes, penalties, and interest.

         ¶ 9 On January 6, 2015, Cuevas filed a timely petition for administrative review of that decision (case No. 15 CH 169). As amended, the administrative review complaint alleged that the DEHE's decision was erroneous because, among other reasons, the new lien and collection system could not apply to taxes which became delinquent before the July 16, 2013 effective date of Public Act 98-93.

         ¶ 10 On February 10, 2015, Cuevas filed a second lawsuit (case No. 15 CH 2321) which he framed as a class action to also include similarly affected taxpayers. As amended, the complaint asserted numerous claims against section 9-275. These included, among other things: violation of state and federal constitutional guarantees of uniform taxation, equal protection, and due process; vagueness; ambiguity; and arbitrariness. Like the administrative review lawsuit, it also challenged the law's retroactive effect, noting that the tax years in question-2006-2012-all ...


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