In this Law and Accounting column in the Chicago Daily Law Bulletin, Jack Barber discussed a recent Illinois Appellate Court opinion holding that the Illinois Department of Revenue was not bound by its prior determinations that an organization was tax exempt. In Meridian Village Association v. Hamer, 2014 IL App (5th) 130078 (March 28, 2014), the court held that the Department properly concluded that a home for elderly residents was not exempt from property tax. The court reached this conclusion despite the fact that the Department had previously found the home to be exempt from retailers’ occupation and use tax. The court held that the Department was not bound by its prior determination and that the home did not establish that it was exempt from tax under Illinois law.
The appellate court’s analysis and decision emphasize that charitable organizations operating in Illinois cannot simply rely on tax exemption decisions by the Department of Revenue in prior years or regarding other taxes. Charitable organizations must continuously ensure that their operations meet the criteria for charitable-use tax exemptions to ensure they will maintain their tax-exempt status under Illinois law. And charitable organizations faced with a tax dispute must ensure that they and their legal counsel establish the necessary facts to support the claimed tax exemption under Illinois law.