PLATTSBURGH — Many taxpayers in Clinton, Essex and Franklin counties will not benefit from the governor’s tax pre-payment directive, issued earlier this week, a local tax professional said Thursday.
The executive order, which was designed to help soften one blow of the recent federal tax overhaul, allows New Yorkers to pay 2018 property taxes before the year’s end so they can attempt to deduct the payments from their 2017 federal taxes.
But Vasso LaForest, a certified public accountant in the Town of Plattsburgh, said that while the order allows municipalities to collect taxes early, a memo from the Internal Revenue Service clearly states that it might not allow taxpayers to deduct those payments.
The IRS memo, issued Wednesday, says: “A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.
“State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed.”
LaForest echoed that statement.
“The prepayment of property taxes in 2017 would only be allowed as a tax deduction if the (2018) taxes are actually assessed in 2017 and paid in 2017,” he said.
“However, it is my understanding that town taxes are assessed on Jan. 1 of each year; thereby the IRS will disallow the deduction even if you pay it in 2017.”
The question at the heart of the matter, LaForest said, is whether taxpayers are legally obligated to pay before Jan. 1.
“Otherwise, it’s not legally assessed yet,” he said.
“I think what’s going to end up happening is that some people are going to pay and get preparers to deduct it, and it’s going to be up to the IRS to try to audit that or not.”
Nonetheless, county treasurers and local tax collectors are still scrambling to comply with Gov. Andrew Cuomo’s executive order.
Clinton County Treasurer Kimberly Davis received the same memo from the IRS, but she interpreted it differently.
“There are very different interpretations on when the assessment is,” she said, “because the (tax) role is finalized in 2017, which is how your 2018 taxes are produced.
“I have contacted the Governor’s Office, and granted, they are not the IRS, but their interpretation is that the 2018 taxes are based on the assessment and that they will be accepted.”
Davis advised taxpayers to seek advice from their tax professional.
The City of Plattsburgh Common Council held an emergency meeting Wednesday night, and councilors authorized the city tax warrant for 2018.
A number of other local municipalities have also taken action to allow pre-payment of the 2018 taxes.
The newly passed federal tax law, which prompted the governor’s executive order, limits the federal deduction for combined state and local income-tax and property-tax payments to $10,000.
It also doubles the size of the standard deduction. As a result, experts say, more people will choose not to itemize deductions on their 2018 federal income tax returns (filed in 2019) and will be unable to deduct 2018 property taxes.
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