Governor Bruce Rauner Planning to Freeze Property Taxes

Back in late November 2016, Illinois Governor Bruce Rauner announced that he plans to freeze property taxes throughout the state. Illinois has gained an increasing reputation for its high property tax rate.

As a matter of fact, SmartAsset states that "the state of Illinois has the second highest property taxes in the country. The statewide average effective tax rate is 2.13%, nearly double the national average."

In response to this, Governor Rauner is attempting to create a permanent property tax freeze. But along with high property tax rates, Illinois has also been without a budget for nearly two years as Democrats in the Illinois House of Representatives face a continual standoff with Governor Rauner.

As a theoretical win-win solution, Governor Rauner "told legislative leaders Wednesday that he’d consider a partial budget only if term limits and a permanent property tax freeze were included", according to the Chicago Sun-Times.

But when we dive deeper into the issue of a permanent property tax freeze, the issue may not be as cut and dry as it seems.

According to NPR, "none of the freeze legislation introduced over the last couple of years would guarantee that taxes never increased on a particular piece of property. Rather, like the existing tax caps law, they all would cap the total amount of money a government body could ask from all property owners within its borders."

Essentially, an individual could potentially pay more money in property taxes in the coming years with a government-induced cap on what that amount could be.

NPR continues to discuss how many municipalities, especially those in smaller districts, depend largely on property taxes for their funding. Without property taxes, pensions are in danger, municipality employees (such as teachers) can be laid off, and infrastructure as a whole can see a decline. This leaves the local municipalities to find another route to gather their funding.

Ultimately, time will tell whether or not a property tax freeze is included in a budget deal between the governor and state lawmakers. But with any policy decision, there needs to be an investigation into solutions for the potential pitfalls.

For more information on Michna Law Group, contact us by phone at 847.446.4600 or by email at BJM@MichnaLaw.com.

IRS Using Private Debt Collectors

Tax day has come and gone as millions finally breathe that sigh of relief. As of yesterday, April 18th, the entire country had to file their 2016 taxes. But for some, the "fun" may just be getting started.

According to MLive, "The Internal Revenue Service audited about 0.7 percent of individual 2015 tax returns, about 1 million of 148 individual returns, according to IRS data."

So the odds seem small, right? Well, the IRS now has a new way to go after outstanding debts owed from over the years.

According to the IRS, "The new program, authorized under a federal law enacted by Congress last December, enables these designated contractors to collect, on the government’s behalf, outstanding inactive tax receivables."

They go on to say that "these private collection agencies will work on accounts where taxpayers owe money, but the IRS is no longer actively working them. Several factors contribute to the IRS assigning these accounts to private collection agencies, including older, overdue tax accounts or lack of resources preventing the IRS from working the cases."

The downside of this plan is that it potentially leaves taxpayers open to fraudulent activity. For example, a person can call up another pretending to be from the IRS, only as an attempt to gather your personal information and even your money.

In addition, NBC News reports that the National Consumer Law Center has their own concerns.

"There are so many reasons why it's a bad idea that the IRS has been forced to use private debt collectors," said Chi Chi Wu, staff attorney with the National Consumer Law Center. "They're the most complained about industry to the Federal Trade Commission and the Consumer Financial Protection Bureau. All too often, consumers are being mistreated by debt collectors and now taxpayers are at risk of that in the collection of tax debt."

However, the IRS has safeguards in place as an answer to the criticism they've received regarding this initiative.

For example, they've outlined the debt collection agencies who will take part in this program on their website: CBE, ConServe, Performant, and Pioneer.

Also, the IRS will not be targeting taxpayers in these subgroups:

Deceased

Under the age of 18

In designated combat zones

Victims of tax-related identity theft

Currently under examination, litigation, criminal investigation or levy

Subject to pending or active offers in compromise

Subject to an installment agreement

Subject to a right of appeal

Classified as innocent spouse cases

In presidentially declared disaster areas and requesting relief from collection

Lastly, the IRS informs that "Private collection agencies will not ask for payment on a prepaid debit, iTunes or gift card. Taxpayers will be informed about electronic payment options for taxpayers on IRS.gov/Pay Your Tax Bill. Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency."

Ultimately, it's too soon to see how their best-laid plan pans out in practice.

For additional information on tax scams and consumer alerts, visit the IRS website page here. For more information on Michna Law Group, contact us by phone at 847.446.4600 or by email at BJM@MichnaLaw.com.

Illinois Asset Forfeiture

Asset forfeiture is designed to hinder crime throughout the United States. When police suspect someone is using an item to commit a crime, say a vehicle, for instance, they can legally seize said vehicle.

According to the U.S. Department of Justice, asset forfeiture "encompasses the seizure and forfeiture of assets that represent the proceeds of, or were used to facilitate federal crimes. The primary mission of the Program is to employ asset forfeiture powers in a manner that enhances public safety and security. This is accomplished by removing the proceeds of crime and other assets relied upon by criminals and their associates to perpetuate their criminal activity against our society. Asset forfeiture has the power to disrupt or dismantle criminal organizations that would continue to function if we only convicted and incarcerated specific individuals."

In recent years, this program has come under fire, though. John Oliver, hose of Last Week Tonight, even dedicated asset (civil) forfeiture to the main story for one of his episodes in 2014.

IllinoisPolicy.org has covered this topic in detail. Because "practically any type of property may be forfeited, including cash, a vehicle, personal property, or even real estate", this has led many to accuse police officers of abusing their authority.

In addition, the Chicago Sun-Times writes that the philosophy of "innocent until proven guilty doesn’t apply in civil forfeiture cases, nor do indigent people have a right to a lawyer."

Along with that, "someone who contests a forfeiture must pay filing fees and a “cost bond” equal to 10 percent of the value of the confiscated property just to appeal. Even if they win, they only get 90 percent of their cost bond back, and they can’t recover their legal fees." By this point, it's abundantly obvious that the system is against the little guy.

In their defense, law enforcement officials claim that "the civil forfeitures system fights crime by seizing the rewards of criminal activity. The money, much of which goes to police and prosecutors, also supports law enforcement activities." In theory, this sounds like a solid idea, this has led to countless nightmare scenarios in practice.

For example, QCOnline wrote a story about Judy Wiese, a woman in Moline, Illinois, who had her car taken away after her grandson was caught driving it with a revoked license. Because the burden of proof is on Wiese, it was her duty to show the courts that her car wasn't "guilty" in her grandson's crime. Eventually, a lawyer helped her to reclaim her vehicle, but the majority out there aren't so fortunate.

In similar instance, Francis Pizano Martinez lost her vehicle after her son was caught driving with a suspended license. However, this tale has a different ending. Despite putting a lot of time and money into her car, she ultimately permanently surrendered it, becoming another victim of the same system.

But there is hope.

Democratic Illinois House Representative Will Guzzardi created House Bill 689, along with Republican House Representatives Tom Demmer and Steven Andersson as the chief co-sponsors, reports NPR Illinois.

Creates the Seizure and Forfeiture Reporting Act. Provides that the Illinois Criminal Justice Information Authority shall establish and maintain on its official website a searchable public database that includes specified information about property seized and forfeited under State law and under any agreement with the federal government. Provides that every law enforcement agency that seizes property subject to reporting under the Act shall report the specified information required under the Act on a monthly basis. Provides that the Illinois Criminal Justice Information Authority may recoup its costs under the Act by charging a fee to law enforcement agencies required to file a report. Provides that the Act applies to provisions of law that authorizes a law enforcement agency to seize property alleged to have been used in or derived from the commission of a criminal offense. Creates the Asset Forfeiture Proceeds Disbursement Law. Provides that the Illinois Criminal Justice Information Authority shall award grants under the procedures of the Act for the disbursement of monies collected in the Asset Forfeiture Proceeds Fund. Amends various Acts concerning criminal forfeiture to make conforming changes. Changes most forfeiture distributions from law enforcement agencies to the Asset Forfeiture Proceeds Fund. Makes changes to the procedures and distribution of contraband proceeds to various governmental units and agencies.

Meanwhile, it the Illinois State Senate, Senator Don Harmon has introduced Senate Bill 1578.

Creates the Seizure and Forfeiture Reporting Act. Provides that the Illinois Criminal Justice Information Authority shall establish and maintain on its official website a searchable public database that includes specified information about property seized and forfeited under State law and under any agreement with the federal government. Provides that every law enforcement agency that seizes property subject to reporting under the Act shall report the specified information required under the Act on a monthly basis. Provides that the Illinois Criminal Justice Information Authority may recoup its costs under the Act by charging a fee to law enforcement agencies required to file a report. Provides that the Act applies to provisions of law that authorizes a law enforcement agency to seize property alleged to have been used in or derived from the commission of a criminal offense. Creates the Asset Forfeiture Proceeds Disbursement Law. Provides that the Illinois Criminal Justice Information Authority shall award grants under the procedures of the Act for the disbursement of monies collected in the Asset Forfeiture Proceeds Fund. Amends various Acts concerning criminal forfeiture to make conforming changes. Changes most forfeiture distributions from law enforcement agencies to the Asset Forfeiture Proceeds Fund. Makes changes to the procedures and distribution of contraband proceeds to various governmental units and agencies.

In essence, NPR Illinois writes that "if the Guzzardi and Harmon bills become law, people would have to be convicted of crimes before their property could be forfeited. And the burden of proving a property’s role in a crime would fall on the state instead of the property owner."

While it will still be quite some time before these bills can go through, at least Illinois has agents for positive change.

For additional questions on real estate law, contact Michna Law Group by phone at 847.446.4600 or by email at BJM@MichnaLaw.com.