Supreme Court Declines Appeal Backed by Illinois School Districts on Tax Remedies

By Mark Walsh — November 16, 2020 2 min read
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The U.S. Supreme Court on Monday declined to take up an appeal backed by several Illinois school districts and education groups of a lower court ruling allowing some property taxpayers to challenge their tax assessments in federal court.

The appeal in Pappas v. A.F. Moore & Associates Inc. (Case No. 20-316) was supported in a friend-of-the-court brief by nine small suburban Chicago districts along with the Illinois Association of School Boards and the Illinois Association of School Business Officials.

The school districts argued they will have to refund some $20 million in property taxes to several small businesses and a shopping mall and face a “Pandora’s box” of future challenges in federal court.

The taxpayers had challenged a system of tax breaks in Cook County, Ill., for certain property holders that made their effective tax rates significantly higher than those of entities receiving the breaks.

In a Jan. 29 opinion written by then-Judge Amy Coney Barrett prior to her elevation to the Supreme Court, a unanimous panel of the U.S. Court of Appeals for the 7th Circuit, in Chicago, had allowed the taxpayers to revive their 14th Amendment equal-protection challenge in federal court to the methodology used by the tax assessor in Cook County.

Most disputes over local taxes are kept out of federal court by a federal statute known as the Tax Injunction Act, which strips federal district courts of jurisdiction over challenges to state and local taxes as long as the taxpayer has an adequate forum in state court to raise constitutional claims.

Because Cook County had conceded that Illinois’s tax-objection procedures do not allow taxpayers to raise federal constitutional claims in state court, Barrett wrote for the 7th Circuit panel, “We are left to conclude that this is the rare case in which taxpayers lack an adequate state-court remedy.”

The Cook County treasurer, Maria Pappas, appealed that decision to the Supreme Court, where she was supported by the school districts and education groups.

“If the decision below stands, it will have a vast and crippling impact on the finances of Illinois school districts, municipalities, and other taxing districts,” the school groups’ brief said. “By allowing tax objection complaints to be heard in federal courts, the 7th Circuit’s decision exposes taxing districts to uncertainty and potentially significant litigation costs.”

The groups argued that Illinois state courts are the proper forum for challenges to tax assessment methodologies and that such courts may entertain federal constitutional claims.

The taxpayers, in a brief urging the high court not to hear the dispute, said their case was the rare one where the Illinois state courts did not provide, in the words of the Tax Injunction Act, a “plain, speedy, and efficient remedy” to their claims.

“The decision below does not pave the way for federal litigation of ‘garden variety’ or ‘ordinary’ tax disputes, nor does it ‘federalize’ tax objections,” the taxpayers said.

The Supreme Court declined without comment to hear the appeal of the Cook County treasurer, but the court noted that now-Justice Barrett did not participate in the consideration or the decision.

A version of this news article first appeared in The School Law Blog.