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SOME STATES CONSIDER TREATING GOVERNMENT SERVICES AS CHARITIES SO TAXPAYERS CAN GET TAX DEDUCTIONS
Release Date: December 22, 2017

RECEIVED A CALL FROM OFFICE OF REAL PROPERTY TAX SERVICES – THEY ARE REVIEWING PROBLEM TOWN RESIDENTS IN WESTCHESTER HAVE—NOT BEING ABLE TO PRE PAY TAXES

 

ASKING NYS TO DO WHAT OTHER STATES ARE CONSIDERING—TREATING SOME GOVERNMENT SERVICES AS CHARITABLE DONATIONS SO YOU CAN CONTINUE TO GET A TAX DEDUCTION

 

Am very aggravated over the fact that residents of Towns in Westchester County are being treated differently from residents who live in cities and in other counties. We are not allowed to pre-pay 2018 taxes before the end of the year.  I have written to the Governor, to Legislators, to other municipal officials. So far—no luck.  However I did receive a phone call from the Office of Real Property Tax Services yesterday indicating that they are aware of the problems that residents of towns have and that they are reviewing the request to make it possible for residents of towns to be treated no differently than residents of other communities around NYS—and to be able to pre-pay the taxes this year. If I receive any news I will post updates on the town e list and advise everyone who reached out to me about this matter. As of now, haven’t heard anything more…

 

ON ANOTHER NOTE---

There are two interesting articles in the LA TIMES and Washington Examiner. Some states are considering circumventing the tax code by declaring some government services as charities. Will be asking the Governor and NYS Legislators to consider taking this action—which would enable Greenburgh residents to continue to get the tax deduction on at least some parts of our property taxes. Links to the two articles are below.

PAUL FEINER

Greenburgh Town Supervisor

 

 

 

http://www.latimes.com/business/hiltzik/la-fi-hiltzik-tax-bill-california-20171214-story.html

http://www.washingtonexaminer.com/gop-limit-on-state-local-tax-deductions-could-be-circumvented-with-charities/article/2644096

 

 

 

GOP limit on state, local tax deductions could be circumvented with charities

Joseph LawlerDec 21, 2017, 11:11 AM

 

 

Tax experts have identified a potential workaround to the new limitation Republicans are placing on the state and local tax deduction, and say states could set up charities to fund state services that could receive federally deductible gifts.

The GOP tax overhaul passed by Congress this week sets a limit on the federal deduction for state and local taxes, or SALT. Under the bill, taxpayers can only deduct up to $10,000 in state income and property taxes from their federal taxable income.

 

But it appears that state and local governments could help residents circumvent that limit by setting up charities to fund programs. Here's how it would work:

Taxpayers suffering tax hikes due to the SALT limitation could donate to the charities and, in return, receive a dollar-for-dollar tax credit applicable to their state or local tax bill. Then, they could deduct up to 37 percent of that the “donation” from their federal taxable income through the charitable deduction, which was left uncapped in the tax overhaul. The deduction level would depend on their tax bracket.

In this way, states could create tax credits for donations to, for instance, their university systems by giving donors back 100 percent of the gift in the form of state income tax breaks. From the state’s perspective, it would still be getting revenue to fund services. But from the taxpayers' perspective, they would be able to write off a portion of that donation from their federal taxes, which they couldn't do if the university funding were collected in the form of a tax.

They'd have a big incentive to do so, because they'd effectively be getting 37 cents back for every dollar they donated to university system, in the form of federal charitable deductions, assuming they were in the top income bracket.

“It is a very significant flaw/hole in the new law,” said Kirk Stark, a professor of tax law at UCLA who has studied state charitable tax credits.

To the extent the maneuver worked, it would cut into the revenues the GOP plan is meant to raise to help pay for tax cuts. Republicans limited deductions for state and local taxes in order to help offset the broad tax cuts they approved.

Court cases and IRS guidance have made clear that states are allowed to set up such state charitable tax credits, said University of California, Davis law professor Darien Shanske. “It’s a proven legal technology,” he said.

Previously, contributions to such programs would have made sense for taxpayers subject to the Alternative Minimum Tax. For some people, the AMT disallows SALT deductions but not charitable contributions.

Under the Republican measure, many more taxpayers would benefit from making such gifts, because far more people would be up against the $10,000 SALT limit.

There are examples of such credits today. For example, Tax Analysts chief economist Martin Sullivan, who pointed out the potential workaround, cited a credit established by Maryland for donations to eligible charities.

Shanske said it would be novel for states to set up such programs at a scale large enough to seriously cut into the revenues raised by the cap on SALT, but said the logistics of doing so are well established. In fact, "it’s not clear that it is a loophole," he said, but rather simply a feature of tax law that could take on new significance in the years ahead.

Stark, though, suggested that states and cities are liable to set up such programs in large enough quantities to create a revenue problem. “‘Fixing this will require new legislation from Congress,” he said.

 

 

Town Hall will be closed Friday, December 22nd at 12:30, Monday December 25th, Friday, December 29th at 12:30 and Monday January 1.  You can pay the 2nd half of the school tax (which is due January 31st this year. Since the taxes were already assessed you can get your deduction on the 2nd half of the school taxes. However- consult your accountants or financial advisors to make sure this makes sense for you. And you should check with your bank if  the bank is paying your taxes. You don’t want to double pay. Refunds take time to process.

 

In recent weeks I have received hundreds of phone calls and many e mails from constituents who want to pay their 2018 property taxes in December of this year. This weekend the NY TIMES wrote a story (which I quoted and shared indicating that property taxpayers can't get a deduction if they pre pay the taxes in 2017. That was inaccurate. The newly added Congressional prohibition on deducting pre payments only applies to income taxes NOT property taxes. 

 

You may have friends who live in other communities around the state that are pre paying their taxes. And you might want to know why you can't prepay your taxes in Greenburgh--other than the 2nd half of the school tax (which is collected in December).

 

I have been on the phone, have been e mailing the Governor's office, the County Executive's office, municipal officials non stop for the past few weeks trying to see if you can pre-pay your 2018 taxes in 2017. I have spoken with Anne Povella, Receiver of Taxes daily about this.  And, have tried to encourage the Governor's office to call a special session of the NYS Legislature to address the problem towns in Westchester have.

 

The big problem: NYS law requires the county to issue a tax warrant before the Receiver of Taxes can accept taxes. The town collects taxes for the county, school district fire district. The County Legislature is expected to override the County Executive's budget veto today --leaving a short time for the county to do the work necessary to have a warrant processed before the end of the year. I spoke with Deputy County Executive Kevin Plunkett who advises me that the county doesn't have the time or ability to process the warrant before December 31--it's very complicated, he said and usually is not completed until February.

 

Another issue (as you will note from the e mail I received from another Town Supervisor, Warren Lucas)---other communities collect their taxes earlier in the year: January. Towns in Westchester collect the taxes in April. Cities are treated differently than towns in NYS - making it possible for some residents in certain cities to pre pay their taxes.

 

If anything changes I will keep you advised.  I'm sorry for the aggravations.

 

 

 

THIS IS WHAT THE BEDFORD TOWN SUPERVISOR IS SENDING HIS CONSTITUENTS

 

TIPS ON PREPAYMENT OF 2018 PROPERTY TAXES

With possible changes in the federal tax law, some residents have contacted us regarding prepayment of 2018 property taxes.   We are permitted under NYS tax law to collect a prepayment of the second half of 2017-18 school taxes, but without a tax warrant, we are not permitted to collect any prepayment of the Town tax bill which would be due by April 30 (we cannot generate the bills without the warrant).   If you wish to prepay second half of 2017-18 school taxes in 2017, be sure the Bedford Tax Receiver receives payment on or before December 31, 2017 or transmittal of payment is postmarked on or before December 31, 2017.  Should you have any questions, feel free to contact Amy Pectol, Bedford Tax Receiver at 666-4475 or apectol@bedfordny.gov

 

 

 

 

 

 

 

Chris Burdick

Supervisor

Town of Bedford

321 Bedford Road

Bedford Hills, New York 10507

914-666-6530

supervisor@bedfordny.gov

www.bedfordny.gov

 

 

 

From: Warren Lucas [mailto:Wlucas@northsalemny.org]

Sent: Thursday, December 07, 2017 10:31 PM

To: Paul Feiner <pfeiner@greenburghny.com>; Bedford Town Supervisor <supervisor@bedfordny.gov>

Cc: Anthony Colavito <acolavita@eastchester.org>; cfulgenzi@mtpleasantny.com; Burdick, Chris <cburdick@bedfordny.gov>; Dana <dlevenberg@townofossining.com>; Linda Puglisi < lindap@townofcortlandt.com>; Michael Grace <mgrace@yorktownny.org>; Michael Schiliro <mschiliro@northcastleny.com>; Nancy Seligson <supervisor@townofmamaroneck.org>; Peter Parsons <supervisor@lewisborogov.com>; Richard Lyman <rlyman@townofpoundridge.com>; Rick Morrissey <rmorrissey@somersny.com>; Robert Greenstein <rgreenstein@town.new-castle.ny.us>; Ron Belmont <rbelmont@harrison-ny.gov>; supervisor@philipstown.com; thay@southeast-ny.gov; Altieri, Stephen <SAltieri@TownofMamaroneckNY.org>; Anne Janiak <ajaniak@wedcbiz.org>; Peter Scherer <pscherer@hplusinc.com>; Drew Fixell <dfixell@tarrytowngov.com>; David Buchwald <buchwaldd@nyassembly.gov>; George Latimer (latimer@nysenate.gov) <latimer@nysenate.gov>

Subject: RE: PROPOSAL RE: TAX DEDUCTIONS--NYS SHOULD LET TAX COLLECTORS COLLECT PRE PAID TAXES IN 2017 FOR 2018

 

Chris, the issue for us unlike the rest of the state is that we can't create the warrant without all of the information including Westchester County's information.  They always provide that to us in February.  As I mentioned other Counties warrants are already being created because their taxes are collected in January whereas our is April.

 

What everyone can and should do if they fall into this problem area is pay the second part of their school tax, due in January, before the end of the year.  We need to make people aware of that if the Federal legislation goes through.

 

 

Sincerely,

 

Warren J. Lucas

Supervisor, Town of North Salem

266 Titicus Road

North Salem, NY 10560

(914) 669 5110 work

(914) 261 2636 cell

www.northsalemny.org

 

 

 

 

 

 

 

From: Warren Lucas [mailto:Wlucas@northsalemny.org]

Sent: Thursday, December 07, 2017 5:04 PM

To: Paul Feiner <pfeiner@greenburghny.com>; Anthony Colavito <acolavita@eastchester.org>; cfulgenzi@mtpleasantny.com; Burdick, Chris <cburdick@bedfordny.gov>; Bedford Town Supervisor <supervisor@bedfordny.gov>; Dana <dlevenberg@townofossining.com>; Linda Puglisi <lindap@townofcortlandt.com>; Michael Grace <mgrace@yorktownny.org>; Michael Schiliro <mschiliro@northcastleny.com>; Nancy Seligson <supervisor@townofmamaroneck.org>; Peter Parsons <supervisor@lewisborogov.com>; Richard Lyman <rlyman@townofpoundridge.com>; Rick Morrissey <rmorrissey@somersny.com>; Robert Greenstein <rgreenstein@town.new-castle.ny.us>; Ron Belmont <rbelmont@harrison-ny.gov>; supervisor@philipstown.com; thay@southeast-ny.gov

Cc: Altieri, Stephen <SAltieri@TownofMamaroneckNY.org>; Anne Janiak <ajaniak@wedcbiz.org>; Peter Scherer <pscherer@hplusinc.com>; Drew Fixell <dfixell@tarrytowngov.com>

Subject: RE: PROPOSAL RE: TAX DEDUCTIONS--NYS SHOULD LET TAX COLLECTORS COLLECT PRE PAID TAXES IN 2017 FOR 2018

 

Paul, I have been talking to my Assessor and Tax Receiver about the issue you raised.  An interesting part of the discussion is that all other Counties in the State will have their Town and County warrant done December 31st as they normally collect taxes in January.  What that means is that residents in other counties can pay their 2018 Town Tax Warrant this year while Westchester can't.

 

SCA (Municity) has a large number of the Towns.  We talked to the owner of SCA today.  He is already at capacity for the Towns he has in other Counties and could not process the warrants for the Towns in Westchester.

 

At the WMOA meeting it was mentioned that a person with a mortgage can't take advantage of it.  My Tax receiver called her mortgage company and told them to pay her January taxes (School) before the end of the year.   This can be done if their escrows are sufficient.

 

 

Sincerely,

 

Warren J. Lucas

Supervisor, Town of North Salem

266 Titicus Road

North Salem, NY 10560

(914) 669 5110 work

(914) 261 2636 cell

www.northsalemny.org

 

 

 

From: Paul Feiner [mailto:pfeiner@greenburghny.com]

Sent: Wednesday, December 06, 2017 4:07 PM

To: Warren Lucas; Anthony Colavito; cfulgenzi@mtpleasantny.com; Chris Burdick; Chris Burdick; Dana; Linda Puglisi; Michael Grace; Michael Schiliro; Nancy Seligson; Peter Parsons; Richard Lyman; Rick Morrissey; Robert Greenstein; Ron Belmont; supervisor@philipstown.com; thay@southeast-ny.gov

Subject: PROPOSAL RE: TAX DEDUCTIONS--NYS SHOULD LET TAX COLLECTORS COLLECT PRE PAID TAXES IN 2017 FOR 2018

 

 

YOU CAN SAVE $ AND STILL GET YOUR TAX DEDUCTION ON SCHOOL TAXES IF YOU PREPAY YOUR 2ND HALF OF SCHOOL TAXES BEFORE END OF THIS YEAR

I AM REACHING OUT TO THE GOVERNOR’S OFFICE AND WILL ASK IF THE STATE COULD APPROVE EMERGENCY LEGISLATION THAT WILL ENABLE LOCAL GOVERNMENTS TO ACCEPT PRE-PAYMENTS OF TOWN, VILLAGE, COUNTY AND FIRE DISTRICT TAXES DUE IN 2018 IN 2017 –WHILE DEDUCTIONS ARE STILL IN FORCE.  WILL DISCUSS AT TUESDAY’S WORK SESSION

THIS PROPOSAL-IF APPROVED-  COULD SOME TAXPAYERS THOUSANDS OF DOLLARS BECAUSE THEY WILL GET DEDUCTION

The United States Senate and House of Representatives are considering legislation that will cap real property tax deductions at $10,000. Many residents of Greenburgh pay more than this amount in annual real estate taxes. If the federal legislation is approved and signed into law –property taxpayers in Greenburgh could lose many thousands of dollars.

The proposed federal legislation won’t take effect until 2018. Some residents are paying the 2nd half of the 2017-18 school tax bill before the end of this year instead of waiting until January. This can help them save some money.

I have been asked if residents could pre-pay the town, county, fire district taxes which are due in April. The problem: we don’t know what the tax rate will be. I have done some preliminary research and found that in the case of real property tax collection pursuant to the Real Property Tax Law 904, the warrant of collection is annexed to the assessment roll authorizing and directing the collecting officer to collect the taxes set forth on the roll. This warrant constitutes the mantle of authority for the collecting officer to receive the taxes. Without such warrant, the collecting officer is without authority to collect the real property taxes. Therefore, the warrant must be regarded as the instrument that empowers the collecting officer to begin the collection duties with respect to real property taxes listed in the tax roll.

 

I am contacting the Governor and state officials and will ask if the state could approve an emergency action (in light of the federal tax legislation) that would enable municipalities to accept partial payments of the 2018 town, county, fire district taxes before the end of this year so residents can benefit from the tax deductions that currently are in place. It will be a book keeping headache for local receivers of taxes but could save many homeowners significant dollars since they will get the deduction this year. 

 

I have placed this on Tuesday mornings work session and have asked the Town Attorney to review  the problem with state officials as well.

 

PAUL FEINER

Greenburgh Town Supervisor

 

DO YOU HAVE FAMILY OR FRIENDS WHO LIVE IN A RED STATE REPRESENTED BY A SENATOR OR CONGRESSMAN WHO INITIALLY VOTED TO REPEAL REAL ESTATE PROPERTY TAX DEDUCTIONS AND DEDUCTIONS OF LOCAL AND STATE INCOME TAXES?

CALL YOUR FRIEND AND FAMILY MEMBER AND ASK THEM TO CONTACT THEIR REPRESENTATIVES

 

The most recent action by the US Congress, regarding changes in the tax code will have a major impact on our community and could threaten the ability of many of our residents to remain as homeowners while diminishing the value of our housing stock. The town  and all local government entities must be prudent and cautious regarding spending and must avoid unnecessary risks.

 

The new code, if approved by the US Senate and House of Representatives, will remove the current ability to deduct Local and State Income taxes on Federal tax returns. This change will adversely affect those in states like New York. For Greenburgh, the increase in Income Tax paid will decrease the amount residents will have available to pay for housing and other living expenses.

 

 Depending on the outcome of the negotiations between the US Senate and House of Representatives, mortgage interest on loans in excess of $500,000 may no longer be deductible. In the majority of the town of Greenburgh this provision will affect only a small number of residents. However, in communities with the most expensive homes that are valued in excess of $1,000,000, the majority of constituents could have debt in excess of the  $500,000 potential cap and will lose the deductibility portion of their loan. They, too, will have increased home carrying costs.

 

Both the Senate and House plan to cap the deduction of property taxes at $10,000 each year. The majority of homes in our town and other other counties in southern NYS have property taxes in excess of $10,000 (school, town, village, county, fire district) and many homes assessed at over a million dollars have taxes that are two, three or four times that amount.  The change in this section of the tax code will affect very homeowner and will be devastating to many.

 

Overall, these changes affect all of New York State homeownership, but cut especially deeply in Greenburgh.  The above actions will increase the cost of operating our homes and could decrease the value of all of our housing stock. In addition, the actions contemplated by Washington will decrease the monthly budget amount that prospective buyers will have for purchases.  The inevitable result: fewer buyers and decreased home values.

 

It's not over. The Senate and House of Representatives have to approve the same bill and will have to take another vote--sometime later this month. YOU CAN HELP by contacting family and friends in states with Republican Senators and Representatives. Ask your friend or family member to call their representatives in Washington and vote no on the above provisions.

 

The town of Greenburgh, in anticipation of the possible tax plans, will seek ways to ensure the most efficient and effective approach to the provision of high quality services to our constituency. We will try to avoid taking risks that could negatively impact our residents and wll work together to ensure that our neighbor's can remain in their homes and flourish.

PAUL FEINER

Greenburgh Town Supervisor

 

 

 

 

 

 




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