‘Senior freeze’ tax program riddled with errors, lax oversight, Sun-Times finds

Cook County Clerk Karen Yarbrough tells county Assessor Fritz Kaegi she won’t calculate tax rates till he fixes ‘major errors.’ Kaegi says she doesn’t have that authority.By Tim Novak and Lauren FitzPatrick  Jul 9, 2021, 5:20pm CDT

Submitted by Anthony Travis

The 3,300-square-foot condo in Water Tower Place isn’t on the ocean, like owners Barbara Kaplan Israel and Martin Israel’s place in Florida, but it does have jaw-dropping views of Lake Michigan.

They want to sell. Asking price: $3.3 million.

They’ve had the place for decades. Their property tax bill last year for their condo on the Magnificent Mile? Just $2,502.

The Israels — who pay $19,000 a year in property taxes on their oceanfront condo in Boca Raton, Florida — pay so little in Cook County property taxes thanks to a law the Illinois Legislature passed three decades ago establishing what’s called the “senior citizens assessment freeze homestead exemption” and problems with how the Cook County assessor’s office manages the program.

Legislators portrayed the senior freezes as a way to protect homeowners over 65 years old, many on fixed incomes, from being hit with big tax increases if, thanks to gentrification and booming development, home values and property taxes in their neighborhoods shot up, creating financial hardships for older residents.

In Cook County, though, officials admit the program is riddled with errors. And oversight is so lax that they don’t even try to verify that applicants meet the household income threshold of no more than $65,000 a year.

That’s according to a Chicago Sun-Times investigation that found:

• Cook County Assessor Fritz Kaegi’s office admits it’s made numerous errors in calculating the property tax savings under the senior freeze program — which totaled $250 million last year in savings for eligible seniors, a tax burden that’s shifted onto all other owners of the county’s 1.77 million properties, including low-income homeowners under 65. The county billed $15.6 billion last year, $8.8 billion of it from 1.6 million residential properties.
• The county agency blames its bad math on problems with a mainframe computer that often undervalues properties. A spokesman for the assessor’s office says the only way it can check and verify its figures for seniors covered by the assessment freeze would be to recalculate every one of the 144,904 properties getting the senior citizen assessment freeze one at a time, which the assessor’s office says it doesn’t have the staffing to do.
• The assessor’s office and the Illinois Department of Revenue take taxpayers’ word regarding their income, with no proof required. Applicants for the senior freezes are required only to sign notarized documents swearing that their total household income is no higher than the maximum allowed, currently pegged at $65,000. Seniors don’t have to present any proof of their income, such as tax returns. And Cook County doesn’t consider anything else — such as how many other properties an applicant owns.
• People who might not qualify for the senior freezes but who live in an apartment co-op, retirement home or other large properties that get a single property tax bill still could end up paying less under the program. That’s because Kaegi, like his predecessors, grants one overall senior freeze to each of these big properties, based on residents who qualify. An assessor’s spokesman says the agency can’t say whether the tax savings is passed along to people who live in such buildings who don’t qualify because of age or income.

• Applications for the program — which include 10 income categories — are exempt from the state’s public records law. So the public can’t see how much money the seniors getting the tax break have reported they make.

The Sun-Times analysis “doesn’t do anything to build the confidence of the public” in the property tax system, says Laurence Msall, president of the Civic Federation, a government watchdog organization in Chicago that wants to eliminate all property tax exemptions, including the homeowner exemption and the senior assessment freeze.

“For someone to get a tax break, it has to be pushed onto someone else,” Msall says. “There’s a need for overall reform of the property tax system in Cook County and the layering of exemptions with different levels of eligibility that are difficult to verify.”

More from The Watchdogs

The Watchdogs: Read more Sun-Times investigations.

The legislators who created the freeze in the 1990s were vague about how it should be handled. That’s in contrast to other states with similar programs, which require seniors to submit income tax returns and can perform audits.

“The Cook County assessor doesn’t have the legal authority to determine or challenge someone’s household income,” Msall says, nor even to verify that someone getting the senior freeze actually lives in the residence getting the tax break. “There’s no way to determine who lives there.”

While Kaegi’s office does nothing to verify the income of each senior with a freeze, DuPage County Supervisor of Assessments Helen Krengel says her office requires seniors to submit their federal income tax returns the first time they apply for an assessment freeze. DuPage County has 15,044 properties that get the senior freeze — a little more than 10% of the number getting one in Cook County.

He says he knew the previously undisclosed problem with senior freezes existed when he took office in December 2018.

“There are some people who don’t qualify for it,” Kaegi says. “The question is: How do we find them?”

He has 10 employees who look for people who are getting property tax exemptions they aren’t entitled to receive. But his staff focuses on taxpayers collecting homeowner exemptions on more than one property, which is illegal.

It doesn’t examine the senior assessment freeze properties to determine whether the seniors qualify because Kaegi’s office says it doesn’t havethe staffing it would need to look at tax returns and other financial records of those seniors.

Kaegi’s staff did 25,720 investigations last year, catching 3,054 taxpayers who were illegally collecting exemptions, securing $4.8 million in refunds for Cook County school districts, municipalities and other government agencies, according to a spokesman, Scott Smith.

He says some seniors have gotten unwarranted tax breaks because their assessments were miscalculated by the mainframe computer.”

“We are moving off the mainframe and onto a new integrated property tax system [that] will ensure a more accurate, transparent and fair assessment system,” Smith says. “We are speaking with legislators about proposed language that would close loopholes and strengthen audit capabilities. Options include limiting senior freeze exemptions to those whose homes are under a certain market value or requiring submission of tax forms for a certain number of years.”

As a result of the Sun-Times’ findings regarding mistakes in calculating tax bills for seniors whose assessments have been frozen, Smith says, “We’ve begun a sampling audit to determine the extent of the problem and explore potential solutions.”

Says Kaegi: “We don’t want to be sending out assessments that are mistaken.”

Property taxes shifted due to senior freeze program by ZIP code in Cook County

Based on 2019 tax year

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