Appeals panel: Taxpayers' rights not violated by county assessments raising property taxes in only one township

By Scott Holland | Oct 12, 2018

Coles County Courthouse   By Bubba73 (Jud McCranie) [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], from Wikimedia Commons

A federal appeals panel has shelved an attempt by a group of downstate landowners to sue their county for setting property tax bills after only reassessing the properties in their township, effectively raising their tax bills by 25 percent, allegedly violating their constitutional rights to equal protection.

On Oct. 11, a three-judge panel of the U.S. Seventh Circuit Court of Appeals in Chicago upheld the dismissal of the complaint brought by Coles County property owners Robbie Perry and James Red Dukeman, who had sued Coles County for allegedly imposing a disproportionate tax burden on them and others who own commercial and industrial properties in Mattoon Township.

Their lawsuit had been dismissed by U.S. District Judge Colin Bruce, of the Central District of Illinois.

Seventh Circuit Judges Joel Flaum, Daniel Manion and Diane Sykes heard arguments on the taxpayers’ appeal Sept. 27. Flaum wrote the opinion.

The dispute arose following Coles County’s 2015 countywide reassessment of all commercial and industrial properties. The Mattoon School District urged the county to complete the project before the 2016 tax year, but the county did so only for Mattoon Township, where the new commercial values were up more than $10.6 million compared to the prior assessment, about a 25 percent increase, and industrial properties jumped more than $1.5 million, or 21 percent.

Although the county completed its reassessment of the remainder of the county in time for the 2017 tax year, Perry and Dukeman maintain the timing discrepancy constituted a violation of their rights under the 14th Amendment to equal protection. They further said they should be allowed to sue in federal court because although the Tax Injunction Act generally precludes a federal judge from handing issues related to a state tax law, their complaint meets narrow exception.

Specifically, the taxpayers say current Illinois law doesn’t provide a complete remedy to their complaint. They note their complaint isn’t an accusation of unauthorized assessment or taxation, but that the timing of reassessing only a small part of the county is improper.

“According to plaintiffs,” Flaum wrote, “the Illinois Supreme Court has stated that equitable relief is not available to remedy such ‘procedural errors or irregularities in the taxing process,’ ” so they should be allowed to proceed.

However, Flaum continued, the three cases the plaintiffs cited to bolster that argument fall short as they all point toward pursuit of an adequate remedy of law, which in this case would be to pay the taxes under protest and file an objection.

The appellate panel agreed with Coles County’s position that allowing the Mattoon Township case to proceed would essentially grant all property owners the chance to file federal tax lawsuits seeking injunctive relief. Further, they noted the plaintiffs in this case seek more than injunction, as the complaint sought to secure a refund for the taxes paid based on the higher assessed value as well as additional damages for the alleged effective discrimination in future years.

Flaum likewise rejected the plaintiffs’ position that their suit wouldn’t disrupt the Cole County’s assessment process and actually would help the county by retroactively raising taxes on the other commercial and industrial properties outside Mattoon Township.

“By demanding a substantial refund, an overhaul of the county’s tax assessment and collection procedures going forward,” Flaum wrote, “plaintiffs’ claims necessarily encroach on Coles County’s ability to administer its tax laws, as well as its ability to levy and collect taxes.”

The panel further said the Mattoon Township landowners have no entitlement to an automatic increase of other people’s tax obligations.

Finding Bruce’s dismissal to be accurate, the panel affirmed his judgment and shelved the complaint.

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