We have yet to see the fallout caused by the Republican tax bill passed so close to year’s end. For one thing, citizens and communities were unprepared, making plenty of mistakes amid chaos especially for those trying to save a buck by prepaying local taxes in states with hefty ones.
In New York State, for example, the governor signed an executive order on December 22, permitting citizens to pre-pay state and local property taxes which many did because of the $10,000 cap that kicks in next year. But this order happened five days before Federal guidelines were posted and plenty of folks moved fast, as New Yorkers tend to do, to take tax advantage one last time so they may not have submitted what they needed so they wasted their time.
The guidelines stated that “those prepayments could be deducted only in limited circumstances, a decision that appeared to invalidate many taxpayers’ efforts and raised the prospect that local governments could come under pressure to refund millions of dollars,” according to Washington Post reporters Peter Jamison, Jeff Stein and Patricia Sullivan.
“‘This is not the way to do legislation that will massively impact the entire economy. It sets off a flurry of action from people trying to save money, and they act as rash as the legislators who pushed this thing through,’ said Philip Hackney, a tax expert at Louisiana State University.”
After the executive order but before the Federal guidelines, local news reported people waiting in the cold for over an hour in certain Long Island towns. When we called our town clerk an administrator gave us the amount and she asked us to get the check to the office by noon two days later, Friday, the last working day of 2017. We could not prepay any of the school tax and had to pay all of the rest [no option, as in some communities, to make a partial payment].
When we spoke, the administrator hadn’t yet been informed, and we didn’t yet know, that to count, we needed the 2018 assessment to accompany the check. We subsequently found that out, once reporters got wind of the guidelines, and in time. I posit that many sent or delivered a check without the bill. Others based the amount of their check on a previous assessment. No go.
The day after we called, we visited the clerk’s office. The staff of two had neat files and boxes filled with bills on tables. Their work hours are only 9 a.m. to 3 p.m., Monday through Friday, and yet they were ready.
This city slicker was impressed at how buttoned up and prepared they were.
Normally, our property tax is paid by our mortgage company—it’s part of what we send them monthly—so we notified the company that we had prepaid. The town clerk’s office will also verify this and we expect the mortgage company will refund our payment. Fingers crossed.
Jamison, Stein and Sullivan wrote that Virginia counties don’t mail their assessments until February [and no doubt counties all over the country are in similar binds]. In addition, “The tax law explicitly states that the $10,000 deduction cap cannot be avoided by prepayment of 2018 income taxes but had left open the question of whether it applied to prepaid property taxes.”
So who knows if prepayment will eventually be disallowed? Think of the mess and confusion refunds and tax revisions would cause.
- Will the fact that some have prepaid because they could and others can’t, for whatever reason, disqualify all who tried to save money?
- Will a governor’s executive order count in the end?
This is one tiny example of the fallout from such a sweeping change followed by so little time to implement guidelines. Did those who voted for the bill realize the bedlam they were creating by their last minute vote simply to satisfy their egos to show they got something done in 2017?
In a country where big rules and is most admired, can you think of other instances where small works more efficiently?
