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Preckwinkle, Berrios Urge Passage of Exemption Fraud Legislation


Cook County Board President Toni Preckwinkle and Cook County Assessor Joseph Berrios on Tuesday urged the Illinois Senate to pass legislation that would target property owners who fraudulently collect exemptions.

“Each year, Cook County taxing bodies struggle to make ends meet,” Berrios said. “The legislation I’ve proposed will not only deter people from claiming false exemptions, but help recover the money they’ve unfairly received. When someone cheats, someone else picks up the tab.”

Tax cheaters typically claim that a home is their primary residence when they live somewhere else most of the year. Or, they claim an exemption for a rental property, Berrios said.

On Tuesday, Cook County Board President Toni Preckwinkle sponsored a special resolution requesting the Senate pass House Bill 4148 — the Erroneous Exemption Bill.

“Residents have to bear the financial burden when their neighbors wrongfully take property tax exemptions, so this legislation is about leveling the playing field,” said Cook County Board President Toni Preckwinkle.  “HB4148 promotes fairness in our tax system and will help mitigate difficult budget decisions in the months and years to come.”

The erroneous exemption bill, which passed the House in March, gives assessors throughout Illinois the means to recoup funds from those who have improperly received homeowner, long-time, senior citizen, senior freeze, disabled persons’ or disabled veterans’ exemptions.

It is estimated that $154 million would be recovered in Cook County within the first three years after the bill is signed into law. That money, which does not include penalties or interest, would be distributed to the local taxing bodies.

Berrios proposed the legislation after taking office when his administration noticed the high volume of e-mails and anonymous phone calls complaining about people improperly receiving homeowner or senior exemptions. In 95 percent of those cases, the claims were proven to be true.

“We receive over 1,000 anonymous allegations a year,” Berrios said. “But we’ve never had a law with any teeth to go after the cheaters.”

By law, a person is allowed one homeowner exemption, and it must be on the person’s primary residence. In one case, a man living in the northern suburbs of Cook County had been receiving multiple homeowner exemptions on property he owns. He has saved nearly $90,000 over the course of eight years through cheating the system, Berrios said.

“Without this law, we can’t go after him for any of that money,” Berrios said.

HB4148 provides for the collection and distribution of unpaid property taxes, penalties and interest:

  • Unpaid taxes will be paid to the original taxing districts.
  • Penalty fees will be paid to the chief county assessment officer for administrative costs.
  • Interest collected will be paid to the county in which the property is located.

In another Cook County case, a Chicago woman was receiving four homeowner exemptions on various condominiums she owned. A $40,000 check for the money she owed arrived at the Assessor’s office last fall after her case was anonymously reported and she voluntarily made repayment. That money was sent to the Treasurer’s office, Berrios said.

The bill includes a provision for clerical errors by an assessor’s office which nullifies interest and penalty charges for homeowner exemptions received in error. Those who receive a notice from the assessor’s office that they are fraudulently getting an exemption will have the option to appeal the finding within 30 days.

HB4148 allows the chief county assessment officer to administer property tax liens on the homes of those taxpayers who have received undue property tax exemptions. The penalties for those claiming erroneous homestead exemptions are presented in the chart below.

 

Penalties for Claiming Erroneous Homestead Exemptions

Erroneous Homestead

Assessment Years

Arrearages of Taxes

Penalty

Interest

One

Three

Unpaid taxes due

None

5% per annum

Two

Three

Unpaid taxes due

25% of unpaid taxes

10% per annum

Three or more

Six

Unpaid taxes due

40% of unpaid taxes

15% per annum

 

Texas, Florida, Iowa, Kansas and Oklahoma have some of the most severe homestead fraud laws in the country. Tax authorities in Florida, New York, Ohio, Mississippi, and the District of Columbia have all increased auditing and recovery of funds over the past few years, Berrios said.

 

 

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