SB1322 103RD GENERAL ASSEMBLY

LRB103 05700 HLH 50719 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB1322

Introduced 2/6/2023, by Sen. Celina Villanueva

SYNOPSIS AS INTRODUCED:

35 ILCS 200/Art. 9 Div. 6 heading new
35 ILCS 200/9-280 new
35 ILCS 200/9-281 new

Amends the Property Tax Code. Provides that, in counties with 3,000,000 or more inhabitants, taxpayers of income-producing property shall submit income and expense data annually to the chief county assessment officer on or before July 1 of each year. Provides that, in counties of fewer than 3,000,000 inhabitants, the county board may provide by ordinance or resolution that taxpayers of income-producing property shall submit income and expense data annually to the chief county assessment officer on or before March 31 of each year. Contains certain exceptions. Effective immediately.

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Property Tax Code is amended by adding Division 6 to Article 9 as follows:

(35 ILCS 200/Art. 9 Div. 6 heading new)

Division 6. Income-Producing Property

(35 ILCS 200/9-280 new)

Sec. 9-280. Definitions. As used in this Division 6:

"Expense" or "expenses" means expenditures necessitated by the operation of the real property itself that reduce the income to the property owner or lessee and includes management fees, reserves for replacement, maintenance, property taxes, and insurance, but does not include debt service, reserves for building additions, or income tax.

"Income" means real property revenue that is directed to or received by the property owner in the form of rent from unrelated persons or entities and ancillary revenue to the owner from unrelated persons or entities that is generated exclusively from the operation of the real property itself, such as revenue from parking or other amenities provided to or for the benefit of the property's tenants. "Income" does not include revenue generated from personal property, including but not limited to, revenue from a business enterprise that is operated on the real property or improvements made to the property by a tenant.

"Income and expense data" means data that identifies income and expenses as defined in this Section. This data may be found in annual reports, income and expense statements, and Internal Revenue Service Schedule E or Schedule 8825 tax forms for income-producing property for the immediately preceding year. It also includes data from rent rolls for the current and immediately preceding year. Data may be based on a calendar or fiscal year.

"Income-producing property" means property that is not owner-occupied, as defined in this Section, and is owned for the purpose of generating income from the property itself, whether or not such property actually generates income in a particular year. "Income-producing property" does not include:

(1) property with a market value of $500,000 or less in the most recent assessment year for which an assessment is certified exclusive of any adjustments to assessed value by a board of review, the Property Tax Appeal Board, or the circuit court;

(2) residential property containing 6 or fewer dwelling units;

(3) property assessed under Article 10 of this Code and stadiums that are not qualified property under Section 10-215 that have a seating capacity of 20,000 or more and host major professional sporting events;

(4) property that is assessed by the Department under Article 11 of this Code;

(5) property that is owned or leased by a hospital licensed under the Hospital Licensing Act or operated under the University of Illinois Hospital Act, including any hospital affiliate that directly or indirectly controls, is controlled by, or is under common control with a hospital; or

(6) property that is owned or leased by a facility licensed under the Nursing Home Care Act that is an intermediate or skilled facility.

"Net rentable area" means the square footage of an improvement that may be leased or rented to tenants and excludes common areas such as elevators, stairways, and atriums.

"Owner-occupied" means real property that is used or occupied exclusively by a record owner or related entity, or real property where 80% or more of the net rentable area of the property is occupied or held for future use by the record owner of the property or a related person or entity as described in subsection (b) of Section 267 of the Internal Revenue Code. If more than 20% of the net rentable area of a property is subject to an existing lease or is subject to short term rental of the property by an unrelated entity, the property is not considered owner-occupied for purposes of this Division.

"Property" has the meaning set forth in Section 1-130 of this Code and includes contiguous parcels or property index numbers that comprise one functional property location.

"Taxpayer" means the record owner of income-producing property. The owner or lessee, whoever is contractually obligated to pay property taxes directly to the county treasurer, shall be required under this Article to submit income and expense data that is within its possession and control to the chief county assessment officer for the relevant portion of the property over which it exercises control.

(35 ILCS 200/9-281 new)

Sec. 9-281. Income-producing properties.

(a) In counties with 3,000,000 or more inhabitants, taxpayers or lessees who are contractually obligated to pay property taxes of income-producing property shall submit income and expense data annually to the chief county assessment officer on or before July 1 of each year, except as otherwise provided in this Division. In the first year following the effective date of this amendatory Act of the 103rd General Assembly, income and expense data shall be submitted by September 1. If a taxpayer or party who is contractually obligated to pay property taxes is required to submit income and expense data under this Article in accordance with Section 9-280, the chief county assessment officer shall notify, by certified mail, the record owner of income-producing property at least 60 days prior to the date for submission of the obligation to submit income and expense data. Notice shall include the deadline for submission. If an owner of record claims that another party is obligated to pay property taxes directly to the county treasurer for all or a portion of the property, then the owner shall send to the obligated party a copy of the notice received from the chief county assessment officer of the obligation to submit income and expense data. The taxpayer or obligated party shall submit income and expense data to the chief county assessment officer in accordance with this Section for the relevant portion of the property for which the taxpayer or obligated party is required to pay the property taxes and exercises control over such property, identified by parcel and area.

The chief county assessment officer may extend the time within which taxpayers are required to submit income and expense data under this Section.

Where the taxpayer's books and records reflecting the operation of the property are maintained on a calendar year basis, the statement of income and expense data shall be for the last full calendar year preceding the date that the statement is submitted. Where the taxpayer's books and records reflecting the operation of the property are maintained on a fiscal year basis for federal income tax purposes, the statement of income and expense data shall be the last full fiscal year preceding the date when the statement is submitted.

The taxpayer or obligated party shall certify under oath in a signed attestation that the statements set forth in income and expense data submitted under this Article are true, accurate, and complete to the best of his or her knowledge except as to matters stated to be upon information and belief and, as to such matters, the taxpayer or obligated party shall certify that he or she believes the same to be true, accurate, and complete.

(b) In counties of fewer than 3,000,000 inhabitants, the county board may provide by ordinance or resolution that taxpayers of income-producing property shall submit income and expense data annually to the chief county assessment officer on or before March 31 of each year. If a taxpayer or party who is contractually obligated to pay taxes is required to submit income and expense data under this Article, the chief county assessment officer shall notify the taxpayer of that fact by certified mail within 60 days of the due date for income and expense data. Notice shall include the deadline for such submission. If an owner of record claims that another party is obligated to pay property taxes directly to the county treasurer, then the owner shall send to the obligated party a copy of any notice received from the chief county assessment officer of the obligation to submit income and expense data. The taxpayer or obligated party shall submit income and expense data to the chief county assessment officer in accordance with this Division for the relevant portion of the property for which the taxpayer or obligated party is required to pay the property taxes and exercises control over such property, identified by parcel and area.

The chief county assessment officer may extend the time within which taxpayers are required to submit income and expense data under this Section.

Where the taxpayer's books and records reflecting the operation of the property are maintained on a calendar year basis, the statement of income and expense data shall be for the last full calendar year preceding the date that the statement is submitted. Where the taxpayer's books and records reflecting the operation of the property are maintained on a fiscal year basis for federal income tax purposes, the statement of income and expense data shall be the last full fiscal year preceding the date when the statement is submitted.

The taxpayer or obligated party shall certify under oath in a signed attestation that the statements set forth in income and expense data submitted under this Article are true, accurate, and complete, to the best of his or her knowledge except as to matters stated to be upon information and belief and, as to such matters, the taxpayer or obligated party shall certify that he or she believes the same to be true, accurate, and complete.

Subsections (c) through (i) of this Section shall also apply in counties that have adopted by ordinance or resolution the requirements of this Section.

(c) The chief county assessment officer of a county that is subject to this Section shall establish rules that specify the manner of submission of income and expense data and provide for the administration of the provisions of this Section in the county. Income and expense data shall be submitted in electronic form unless waived by the chief county assessment officer.

The chief county assessment officer shall maintain a copy of its rules for public review and shall place a copy of those rules and any amended rules on his or her website.

(d) If a taxpayer or obligated party fails to submit income and expense data as required under this Section or as required after the adoption of a county board ordinance or resolution under this Section, within the time prescribed, or within an extended period as permitted by the chief county assessment officer, the assessor shall send notice by certified mail to such taxpayer of the failure to comply. If the taxpayer or obligated party fails to submit the required data within 60 days after such notice is sent, fails to provide documentation of another taxpayer's obligation to submit income and expense data, or fails to adequately explain why no submission is required, the taxpayer or obligated party shall pay a penalty to the chief county assessment officer of 0.025% of the prior year's market value as indicated by the most recent certified assessed value for the property at issue, but in no case shall the taxpayer or obligated party be required to pay more than its proportional share of a maximum penalty of $10,000 per property. A taxpayer or obligated party who fails to submit income and expense data in accordance with this provision shall only be required to pay a penalty on the portion of the property's value for which the taxpayer or obligated party is required to pay taxes.

A taxpayer or obligated party may contest the penalty and requirement to report income and expense data in a particular year and submit evidence to the chief county assessment officer in support of a contention that the taxpayer or obligated party was not required to submit income and expense data, that another party was required to submit income and expense data for such property, or that the submission of income and expense data complies with this requirement based on available documentation. The chief county assessment officer shall review the taxpayer or obligated party's submission and other submissions for the property for the tax year at issue, and determine whether the taxpayer or obligated party provided sufficient evidence that he or she was not required to report income and expense data or that the submission complies based on available documentation.

If a taxpayer or obligated party is dissatisfied with a decision of the chief county assessment officer of the requirement to submit income and expense data, the taxpayer or obligated party may request review of that decision. Upon such request, at least 30 days' notice shall be provided to the taxpayer or obligated party of a hearing to be conducted by a hearing officer designated by the chief county assessment officer. If dissatisfied with a hearing officer's decision, the taxpayer or obligated party may appeal such decision to the circuit court of the county where the property is located as a final administrative decision under Administrative Review Law. If a party is unsuccessful at hearing, the penalty imposed under this Section shall bear interest at 0.05% per month thereafter, beginning 21 days after the date of decision, or 21 days after the date of the issuance of a final decision on administrative review.

The State's Attorney of the county in which the property is located shall have power to act on behalf of the people and the chief county assessment officer to enforce the provisions of this Section, including the power to compel by subpoena the production of taxpayer income and expense data that is required to be produced under this Section.

The chief county assessment officer may audit the income and expense data submitted by taxpayers to verify its accuracy by requesting documentation in support of submissions.

(e) Penalty and interest collected by the chief county assessment officer under this Section for a taxpayer's or obligated party's failure to timely submit income and expense data shall be collected in the same manner as other fees collected by the chief county assessment officer. Such revenue shall be deposited with the county treasurer in the county general fund of the county in which the property is located, with 75% of the revenue to be used for the benefit of the office of the chief county assessment officer and 25% to be used for the benefit of the county.

(f) Any personal data such as federal identification or social security numbers and income tax forms or data that are included in income and expense data produced under this Section shall be deemed private information and exempt from disclosure under the Freedom of Information Act. Income and expense data submitted pursuant to this Article shall not be subject to disclosure by the chief county assessment officer in accordance with the Freedom of Information Act and other applicable law, or pursuant to court order in a tax or other matter. Nothing in this Section prohibits a chief county assessment officer from disclosing compiled and anonymized income and expense data as provided in this Section.

(g) The income and expense data submitted pursuant to this Section shall be processed and used as follows:

(1)Income and expense data in its original form in which the taxpayer, obligated party and the property in question is identified shall not be used for purposes of assessing individual properties. The chief county assessment officer shall compile and anonymize income and expense data that is collected under this Division and shall cause such information to be published annually. Compiled and anonymized data may be used in the mass appraisal or assessment of property.

The chief county assessment officer shall cause the income and expense data to be compiled and anonymized in accordance with statistical disclosure controls accepted in the field that account for control of microdata and quantitative and frequency tables in a manner that considers individual property characteristics but prevents the disclosure of individual property identity. Such compilation and anonymization shall be performed by staff who are not directly involved in the valuation of the type of property for which the data has been submitted. The chief county assessment officer shall publish the procedures followed in compiling and anonymizing data.

(2)If a particular property is so unique in characteristics, features, or location that the property or its owner could be identified if the property's income and expense data are included in compiled and anonymized data that is made available to the public, township assessors, or boards of review under this Section, the income and expense data for that particular property shall not be included in compiled and anonymized data.

(3)Notwithstanding any other provision of this Section, the taxpayer or obligated party of any property for which income and expense data has been submitted shall have the right at all times to: (i) obtain a copy of such income and expense data as submitted, in its original form, from the chief county assessment officer; (ii) file such income and expense data in any public forum; or (iii) authorize such filing or publication of the income and expense data in any other manner that the owner may choose.

The chief county assessment officer shall establish and maintain reasonable security measures consistent with state and local law and the Federal Information Security Management Act to protect income and expense data.

(h) All information received by the chief county assessment officer from income and expense data filed under this Article shall be used only for official purposes. Any person who divulges income and expense data submitted under this Article other than as permitted in this Article, in accordance with a proper judicial order, or as otherwise provided by law, shall be guilty of a Class B misdemeanor and subject to a fine not to exceed $7,500.

(i) The chief county assessment officer shall prepare a summary report within 60 days of the completion of the first assessment cycle in which income expense data is compiled under this Section and used in the assessment process, and report findings to the Revenue committees of the Illinois Senate and House of Representatives within 45 days thereafter. The report shall document income and expense data collection, changes in assessed or equalized assessed values that followed the collection and use of compiled and anonymized income and expense data for properties subject to reassessment, shall compare reassessment year assessed or equalized assessed values with values or equalized assessed values from the immediately preceding reassessment cycle. The report shall document any shifts in the percentage of commercial or residential properties that comprise a portion of the total assessed value or equalized assessed value of property within the county. This report shall be produced annually following the effective date of this amendatory Act of the 103rd General Assembly until all property located within a county subject to this Section has been reassessed.

Section 99. Effective date. This Act takes effect upon becoming law.