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Local Government Senior Deferral Program Opinion

The Illinois Department of Revenue (“Department”) has been asked to provide an opinion on whether the inability of the Department to pay deferred real estate tax claims under the Senior Citizens Real Estate Tax Deferral Program (“Senior Deferral Program”) due to the State of Illinois budget impasse requires counties to start proceedings under Article 21 of the Illinois Property Tax Code (35 ILCS 200/21-5 et seq.) that may result in participants in the Senior Deferral Program losing their homes for failure to pay delinquent taxes. The Department advises that counties should not initiate proceedings against participants in the Senior Deferral Program as these taxes are not legally delinquent at this time.

The Section 5 of the Senior Citizens Real Estate Tax Deferral Act (“Senior Deferral Act”) states:

The county collector shall note on his books each claim for deferral of real estate taxes which meets the requirements of Section 3 and, when taxes are extended, shall send to the Department the tax bills, including special assessment bills forwarded to the county collector under Section 3, on all tax deferred property in that collector's county. Unless there is a shortfall in the appropriation or the Senior Citizens Real Estate Tax Revolving Fund balance, at which time the payments shall be made within 14 days of there being sufficient appropriation authority or sufficient fund balance, the Department shall then pay by June 1 or within 30 days of the receipt of these tax bills, whichever is later, to the county collector, for distribution to the taxing bodies in his county, the total amount of taxes so deferred. The Department shall make these payments from the Senior Citizens Real Estate Deferred Tax Revolving Fund.

320 ILCS 30/5 (emphasis added).

Section 5 of the Senior Deferral Act initially creates a claim (“Senior Deferral Claim”) on the collector’s books payable by the Department for the taxes for qualifying property. This section, as amended effective August 9, 2013, clearly shows that the General Assembly anticipated that problems with the Department’s appropriations authority or a revolving fund shortfall may occur. In that event, the time in which the Department is to pay is changed to reflect the potential problems with the appropriations authority or a fund shortfall. Instead of paying the amounts due by June 1 or within 30 days of the receipt of the tax bills, the Department must make payments to the county collector within 14 days of there being appropriation authority or a sufficient fund balance. Based on this statutory authority, it is the Department’s legal opinion that the Senior Deferral Claim constitutes a promise to pay from the Department and that the property taxes are not delinquent until the Department exceeds the statutory time periods for payment. In the current budget impasse, the due date for the Department’s payment of the Senior Deferral Claim will be 14 days after appropriations authority is granted to the Department. As the Senior Deferral Program participants’ taxes are not yet delinquent, any adverse actions against the participants, such as tax sales or foreclosure proceedings, are premature and not legally enforceable.

In addition to this plain reading of the statute, this opinion is supported by four basic rules of statutory construction and legal principles involving conflicts between statutes. The first is that the specific provisions overrule a more general provision. These specific provisions in the Senior Deferral Act override the general provisions in Article 21 of the Property Tax Code regarding tax sales when a Senior Deferral property is involved. The second rule is that the more recent provision takes precedence over a previous provision. In this situation, the August 2013 amendments to the Senior Deferral Act are the most recent statement by the legislature on these matters. The third rule is that a statute should never be read to create absurd results. It would be an absurd result for the legislature to create a specific program designed to allow qualifying, needy senior citizens to keep their homes in spite of their inability to pay property taxes, then subject them to losing their homes due to a state budget impasse that they have no control over, especially when the legislature included a provision in the Senior Deferral Act anticipating that very budget impasse. To read the tax sale provisions in the Property Tax Code to require such harm to the participants would be an absurd result. Finally the statutes in potential conflict should be read in harmony if possible. The only harmonious reading of the Senior Deferral Act and the Property Tax Code is that the legislature anticipated appropriations problems and that these particular taxes are not legally delinquent during the period of the budget impasse.

The Department has also been asked to address whether a county may opt out of the Senior Deferral Program and refuse to accept or grant applications. The answer to that question is no. Section 3 of the Senior Deferral Act contains provisions allowing taxpayers to participate if they meet certain conditions no matter where in the state they live. That section also states in relevant part: “The collector shall grant the tax deferral provided such deferral….” 320 ILCS 30/3 (emphasis added). This language makes clear that the county collector must grant the deferral to all qualified applicants. Further, while some counties have fairly low participation rates from not publicizing or promoting the program, none have opted out. Indeed, there are no express opt out provisions in the statute.

This legal opinion also constitutes sound public policy. The funds to pay the current Senior Deferral Claims exist and are in a special fund independent of the State’s General Revenue Fund. The Senior Citizens Real Estate Deferred Tax Revolving Fund has a balance of approximately $10 million dollars and current obligations of approximately $1 million dollars. The counties will be promptly paid as soon as appropriation authority is granted to the Department. The counties are not at risk.