In Hempstead, a Great Island town where the typical property tax bill tops $10,000, tenants have lined up all week to prepay those taxes for next year. They hold been trying to save thousands of dollars before the new federal tax beak, which goes into effect on New Year’s Day, sharply limits reductions for state and local taxes.
But late on Wednesday, the Internal Revenue Appointment issued new guidance that those people may not be able to save the medium of exchange after all, because a loophole that they were hoping to feat might be narrower than thought. So when Donald X. Clavin Jr., Hempstead’s receiver of exacts, showed up to work Thursday morning, the lines were still there — but citizens had fresh questions. Mr. Clavin had few answers.
“Everybody on line, they’re successful, ‘Don, are we going to be able to do this?’ ” Mr. Clavin said. “And I can’t give them a yes or a no.”
Myriad from NYT:
Prepaying your property tax? IRS cautions it might not pay off
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Among the tax bill’s biggest schlimazels: High-income, blue state taxpayers
The new tax bill, and its $10,000 cap on all local and assert tax deductions, has generated a variety of strong emotions — including anxiety and frustration — in positions like Hempstead.
By Thursday, however, that stew of emotions had been substituted by utter confusion, as well as rage, including among people who had decorticated out money only to discover that they might not get any benefit.
This week’s tax-prepayment wringer coaster could be just the beginning. Republicans pushed through their tax refurbish at blistering speed, giving lawyers and accountants only about a week to muse about the bill before it goes into effect.
But already, those people analysing the law have uncovered internal conflicts and unintended consequences, as well as piece of baggage areas of uncertainty the I.R.S., the Treasury Department and, ultimately, the court system choice be left to resolve.
“It’s fun if you’re a tax lawyer,” said David Herzig, a professor of tax law at Valparaiso University. “I’m not accurate it’s fun if you’re a person going through it.”
The confusion this week stems from the prearrangement in the new tax bill that caps the previously unlimited deduction for state and townsman taxes, and the I.R.S. guidance about the ability of people to prepay property imposes this year.
In Hempstead, and in other high-tax, high cost-of-living communities across the wilderness, tax bills routinely run far above the new $10,000 threshold once state receipts and local property taxes are taken into account. In Nassau County, which categorizes Hempstead, the average state and local tax deduction in the county, including real estate taxes, topped $20,000 in 2015, among the highest in the country, concording to data from the I.R.S.
The new cap does not take effect until January, though. The tax bill explicitly prevented people from prepaying state gains taxes, but it did not address prepayment of property taxes. That gave homeowners a momentary window to pay their 2018 property taxes in 2017, and to take the quite deduction when they file their federal returns this resiliency.
Officials in Chicago, Washington, Fairfax, Va., and other communities reported mammoth surges of residents prepaying taxes, often showing up in person, counters in hand. Democratic politicians, who have opposed the bill, egged them on, sparring that the bill targeted states that tend to vote for Democrats.
Uninterrupted before President Trump signed the bill into law last week, shire officials in Washington announced they would accept prepayments in what the conurbation’s mayor, Muriel Bowser, called a bid to “protect Washingtonians from the negating impacts of this devastating legislation.” Gov. Andrew Cuomo of New York ultimate week signed an executive order opening the door for prepayment, a touch he freely described as a bid to circumvent the new law. Local officials in Maryland, Virginia and other conditions made similar moves.
Even Chris Christie, the Republican governor of New Jersey and an original supporter of Mr. Trump’s, on Wednesday signed an executive order instructing specific officials to accept prepayments.
The I.R.S. memo, however, threw many of those attempts into question. The memo said that property taxes remitted this year would be subject to the old 2017 rules — but only if the levy a tax ons are actually assessed in 2017. That means that payments degraded on estimated assessments, or for years further in the future, probably would not be eligible for the deduction.
Final answers might not be available anytime soon. The I.R.S. teaching left plenty of room for interpretation and was, in any case, nonbinding.
But the memo had an swift impact. In Prince George’s County, Md., the County Council had been outlining to hold an emergency session on Thursday to discuss letting residents prepay their tariffs, a step already taken by neighboring Montgomery County. But within hours of the memo’s report, the council canceled the meeting.
Dannielle M. Glaros, chairwoman of the Prince George’s County Caucus, said the I.R.S. guidance left her little choice. T he decision to cancel the rendezvous resolved the immediate uncertainty, but it did little to ease residents’ larger confounding about the effects of the bill.
“It’s this sense of the unknown,” Ms. Glaros responded. “That is what’s creating a lot of this anxiety that we’re seeing.”
Dread — and also anger. Steve Halliwell, who lives with his wife, Anne, in Irvington, a village in Westchester County, N.Y., launched asking town officials several weeks ago about paying next year’s worth taxes this year. Mr. Cuomo’s executive order last week was meant to for that possible.
But the order came too late for the county’s residents: Officials there communicated this week that they would not be able to issue tax assessments by the end of the year.
“There are a lot of sore people here because they feel powerless and they are not acclimated to to feeling powerless,” Mr. Halliwell said. “This shows the venal side of civil affairs.”
Other communities happily accepted the money — but offered no guarantees that prepaying last will and testament work out for taxpayers.
In Clarkstown, in Rockland County, N.Y., residents began face up at the tax office before 9 a.m. on Thursday. The line snaked down the hall as hundreds of locals waited to get their property tax bill and then pay it. Outside, the parking lot was so piled that police officers directed traffic.
“We brought in extra pole and extended the hours,” said George Hoehmann, the town’s supervisor. “We oblige gotten thousands of calls. Normally, it would be quiet this sometime of year, but there is a lot of anxiety because people don’t know what the burden of the tax bill will be.”
In the last two days, more than 3,500 in the flesh came in to prepay their 2018 property taxes, 2,000 of them on Thursday. “I’ve walked nothing like this ever,” said Mr. Hoehmann, who has been borough supervisor for three years and was a councilman for seven years before.
Mr. Hoehmann revealed he believed the town’s residents would get the tax break under the I.R.S. ruling. The hamlet had already assessed the 2018 property tax bill, allowing residents to prepay their community, county and special district taxes in 2017, he said.
But he also metamorphosed no promises.
“Ultimately that’s between the individual taxpayer and the I.R.S.,” he remarked. “We advised people to speak to their accountant. What we wanted to do was provide them the opportunity.”
Some taxpayers took the uncertainty in stride. Chacko Kurian, who lives in Rockland County, was in descent Thursday morning to pay some of the $30,000 in property taxes he owed on his shelter, which he described as a “mansion” with a fish pond and a waterfall.
Mr. Kurian, a 70-year-old be superannuated engineer for the Metropolitan Transportation Authority, said he did not know whether prepaying his strains would work out. But he figured it was worth the risk.
“My accountant said prepay and see what go ons,” Mr. Kurian said. “You can’t fight the system. It is what it is.”