Due process denied: Illinois’ new scheme to take your tax refund

by Peter White, Liberty Justice Center Residents of Illinois are dying a death by a thousand cuts. Municipalities are finding ever more creative ways to raise revenue: fees, fines and taxes. The trouble for some localities such as the City of Chicago is collection. Now, however, they’ve found something new: the City is going to...

by Peter White, Liberty Justice Center

Residents of Illinois are dying a death by a thousand cuts. Municipalities are finding ever more creative ways to raise revenue: fees, fines and taxes. The trouble for some localities such as the City of Chicago is collection. Now, however, they’ve found something new: the City is going to make sure you pay up by grabbing your state income tax refund.

That’s right – if you owe the City of Chicago money, say from being spotted going 31 mph in a 25 mph zone by a speed limit camera and you don’t pay up pronto, the City can report you to the Illinois Office of the Comptroller (IOC) who will make sure the City gets its share of your tax refund before you do.
Under a new law enacted late last year by the General Assembly, units of local government such as Cook County or the City of Chicago may enter into agreements with the IOC to divert money from your state income tax refund if a local government claims you owe it. In other words, if you don’t pay that parking ticket you got when you came downtown for jury duty, the City will tattle to the IOC, who will take some of that tax refund money you were banking on and hand it over to the City.

In principle, I’m in favor of paying what you owe. If you get a ticket, it’s your responsibility to pay the fine. What I do have a problem with are the strong-arm tactics utilized by the City. Not only will reducing tax refunds have a negative impact on an already sick economy and disproportionately harm those who are already economically disadvantaged, but the scheme recently adopted by the City Council comes dangerously close to offending due process.

Due process is guaranteed by the Fifth and Fourteenth Amendments to the United States Constitution and by Article I Section 2 of the Illinois Constitution. Due process protects individuals’ rights to life, liberty and property. In other words, before the government can take something that is rightfully yours, it must go through the proper procedures to ensure that your interest in whatever the government is taking is not being usurped without just cause. Normally, this consists of giving the debtor proper notice of the government’s grievance, its planned course of action, any remedies available for the debtor, an opportunity for the debtor to tell his side of the story before an arbitrary third party, and finally, recourse to the courts for any final determinations of fact or law.

It is questionable whether the ordinance adopted by the City Council meets these requirements. For example, once the City advises the IOC that you owe it money, a determination that the City alone makes, the Comptroller will give you 60 days to make a written appeal, not to a judge, but to the Comptroller. If the Comptroller wants to, it may request additional information from the City or from you.  But, it doesn’t have to. Once the Comptroller makes a decision as to whether it will pay the City from your tax refund that decision is final. But if it decides not to raid your refund, you will still owe the City money. It will just have to figure out a different way to get it from you. And, it will.