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Dec 28, 2017 4:15 PMPublication: The Southampton Press

South Fork Homeowners Prepay 2018 Property Taxes In Large Numbers To Avoid New Deduction Cap

East Hampton Town residents line up to pay ahead on their 2018 taxes. MIKE WRIGHT
Jan 3, 2018 10:39 AM

Changes in the federal tax code are creating a clear ripple effect locally: The Southampton Town tax receiver’s office saw nearly three times as many people make early payments on their 2018 property taxes throughout the past couple of weeks.

Tax Receiver Theresa Kiernan said that, as of Tuesday afternoon, her office already collected about $128 million of the $328 million in taxes owed for the current year. Payments were collected in person, by mail and online, climbing by about $25 million per day throughout the past week.

By comparison, Ms. Kiernan said her office had collected about $80 million to $90 million by the same time last year.

The surge in early payments reflects that homeowners across the South Fork are looking to avoid the immediate impact of a new federal tax overhaul, which sets a limit on how much state and local taxes may be deducted on federal income tax bills next year—although not everyone was able to take advantage.

For many New Yorkers and residents of states with high property values, the most controversial part of the Republican tax plan signed by President Donald Trump in December significantly scales back the amount of local and state taxes that they can deduct from their federal income taxes—a deduction that is currently unlimited. Under the $1.5 trillion Republican-sponsored plan, the deduction for both individuals and married couples will be capped at $10,000 starting on January 1—an amount that covers local property taxes, state income tax and sales tax paid during the year.

By paying 2018 taxes before December 31, property owners could claim the payments on their 2017 returns, under the previous law with no limits.

But to be able to pay ahead on taxes, a homeowner must receive a warrant from the town via a tax bill, according to officials. The warrants have been issued by both Southampton and East Hampton towns, which both run on a January-to-December fiscal year. In both towns, residents have always been allowed to pay the full year ahead of time, instead of once every six months.

Warrants have not been issued in villages throughout the townships, as they run on a July-to-June fiscal year.

Anticipating that many homeowners would be seeking to pay ahead on their taxes if possible, Governor Andrew Cuomo—a vocal critic of the federal tax law—issued an emergency order on December 22, allowing tax bills to be issued earlier, explained Southampton Town Comptroller Leonard Marchese.

He expects Southampton Town residents—those who reside outside of incorporated villages—to have no issues paying 2018 taxes ahead of time to avoid the new deduction cap. But those who live within village boundaries cannot pay village taxes before the federal law takes effect on January 1, according to officials.

Steve Funsch, the Southampton Village administrator, estimated that he received more than 150 calls from concerned residents in late December inquiring about paying their taxes ahead to sidestep the new law.

“Villages have May warrants,” he said. “Obviously, we can’t move it five months ahead of time.”

Becky Molinaro Hansen, the East Hampton Village administrator, and Elizabeth Lindtvit, the Westhampton Beach Village clerk, also reported a high volume of calls from residents inquiring about possibly paying ahead on their taxes.

Ms. Lindtvit noted that in Westhampton Beach officials are pointing out to residents that they can still pay the portion of the tax bill owed to Southampton Town ahead of time.

In Southampton Town, where residents are eligible to pay ahead, Mr. Marchese said the tax receiver’s office was flooded with people writing checks for the full year. “We’re pretty busy downstairs,” he said as he sat behind his desk on the second floor of Town Hall on Thursday, December 28.

In fact, the office extended its hours to help accommodate people looking to stop in and prepay their taxes in person. The tax receiver’s office in East Hampton did the same on Friday, the last day to make the payments in person before the end of the year.

Mr. Marchese, a resident of the Town of Huntington, shared that he already paid ahead on his taxes for the year by mail—and requested a proof of mailing in case any questions are asked of him down the line.

Standing on line at Town Hall on Thursday afternoon, December 28, Joanne Schmidt of Speonk said she was paying ahead on her 2018 taxes after consulting with her accountant. Ms. Schmidt explained that she was “concerned” when she learned about the cap on deductions in the new federal law, noting that she is retired and on a fixed income.

Others on line shared the same fears.

Daniel Mathues of East Quogue was also at Town Hall on Thursday seeking to pay his 2018 taxes. “I’m trying to save significant money,” he said. He declined to share how much his tax bill was, although he noted that he falls above the $10,000 cap.

Mr. Mathues said he is glad he will at least be able to deduct his full taxes for one more year. “Next year is going to be a different matter,” he noted.

Many of the homeowners lined up outside the tax receiver’s office in East Hampton were also looking to pay their 2018 taxes.

East Hampton homeowner George Yates said he had calculated what prepaying his full tax bill would save him and didn’t hesitate to write the extra check. “I know what my margin rate is, so I know that this will be better for me,” he said. “Anybody who itemizes their deductions has good reason to do this.”

“Accounting 101 in college always told me if you can save taxes today, do that,” said Springs homeowner Peter Levitt, who paid his first half taxes earlier in the month but had come back on Thursday to pay the other half. “Never let an opportunity go by to pay less taxes. It’s not a huge amount, but better in my pocket.”

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They screwed us in December, lets remind them come November. Out with Zeldin!
By Toma Noku (616), Southampton on Dec 28, 17 4:54 PM
1 member liked this comment
Lee Zeldin voted NO to the tax bill. You are entitled to your opinion, but not your facts.
By HB Proud (889), Hampton Bays on Dec 28, 17 6:23 PM
If you are subject to AMT (Alternative Minimum Tax) you weren't getting the deduction anyway. Probably 70% of Long Islanders are subject to AMT and Schumer & Co never seemed to care ....... OK, let's see if Cuomo allows the real estate tax deduction on the State tax return ... let's just watch the hypocrisy.
By HamptonDad (236), Hampton Bays on Dec 28, 17 7:33 PM
They aren't going to get a deduction.

IR-2017-210, Dec. 27, 2017

WASHINGTON - The Internal Revenue Service advised tax professionals and taxpayers today that pre-paying 2018 state and local real property taxes in 2017 may be tax deductible under certain circumstances.

The IRS has received a number of questions from the tax community concerning the deductibility of prepaid real property taxes. In general, whether a taxpayer is allowed a deduction for the prepayment of state ...more
By even flow (1023), East Hampton on Dec 28, 17 5:33 PM
Instead of blaming Trump, you fools should be asking why your Blue state property taxes are so high.
By Babyboo (293), Hampton Bays on Dec 28, 17 6:33 PM
The ultra high taxes in NY State are all on the liberal Democrat government in Albany, that's where the ire should be directed!!!!
By bigfresh (4666), north sea on Dec 28, 17 8:19 PM
This comment has been removed because it is a duplicate, off-topic or contains inappropriate content.
By aging hipster (201), Southampton on Dec 29, 17 5:48 AM
My prior comment was removed because I included a link from Thursday NYT article explaining why you cannot deduct any property taxes beyond the current municipal tax warrant which was mailed out early Dec. of this year.

If you choose to do so, make sure you check the "Audit This Return" box on the front of your 1040.
By aging hipster (201), Southampton on Dec 29, 17 8:12 AM
The blanket rule against posting links really could get a second look. I wonder if, as the commenting community grows, the press will dedicate some time to its members' communication tools...probably not.
By Fore1gnBornHBgrown (8265), HAMPTON BAYS on Dec 29, 17 8:16 AM
it's a slippery slope. The editorial staff would then have to be in a position of weeding out links to legitimate news sources (NYT, Wall Street Journal, etc...) to the thousands of crackpot sites that now dominate the web.
By aging hipster (201), Southampton on Dec 29, 17 8:21 AM
1 member liked this comment
Or the press could just let people make up their own mind about individual sources while they maintain a blanket disclaimer of non-endorsemment.

I think what they're worried about isn't fake news, but malicious links like phishing attacks or harmful downloads.
By Fore1gnBornHBgrown (8265), HAMPTON BAYS on Dec 30, 17 8:22 AM
From today. Dec. 29 front page article from NYT:

"The I.R.S. memo, however, threw many of those efforts into question. The memo said that property taxes paid this year would be subject to the old 2017 rules — but only if the taxes are actually assessed in 2017. That means that payments based on estimated assessments, or for years further in the future, probably would not qualify for the deduction."
By aging hipster (201), Southampton on Dec 29, 17 8:18 AM
Not an issue in Southampton Town where the property tax bills -- which went out later than usual this month -- are based on actual assessments.

Or at least mine is.

The real problem is in Albany, and while Cuomo and Schneiderman (Eric, not Jay) will work hard on putting this all on the GOP, look at who is complicit: State Assemblyman Fred W. Thiele, Jr. and State Senator Ken LaValle.

By Frank Wheeler (1826), Northampton on Dec 29, 17 9:26 AM
1 member liked this comment
It appears from the article that assessments have nothing to do with your ability to pre-pay 2018/2019 taxes.

Unless an official bill for that period has been generated (it hasn't), you are not allowed the deduction for future taxes.

I'm sure IRS computers are being set to flag returns where property tax deductions exceed some threshold from prior year deductions (25%, 30%..?)
By aging hipster (201), Southampton on Dec 29, 17 2:46 PM
Astonishing how many enlightened, sensitive 'progressives' here are raging against a small percentage of wealthy taxpayers paying a little bit more, while the bottom 85% of working class taxpaying families will see a cut.

With the standard exemption doubling and marginal rates going down, the overwhelming majority of people paying more are wealthy, in income, in property holdings, or typically both.

Consider that renters are usually less well off then their homeowning counterparts, ...more
By MoronEliminator (215), Montauk on Dec 29, 17 11:28 AM
Why not direct your ire at the sky high taxes NY residents pay to support a bloated state government?
By BillWillConn3 (180), Southampton on Dec 29, 17 4:06 PM
1 member liked this comment
I'm primarily appalled at how it's now a political prerogative to take from one's political opponents to give to one's supporters.
By Fore1gnBornHBgrown (8265), HAMPTON BAYS on Dec 29, 17 4:13 PM
This will surely expedite blue-state flight.
By Duckbornandraised (184), Eastport on Dec 29, 17 7:56 PM
Funny how some people can blame Donald Trump who has been in office for one year for High real estate taxes. Why not blame your local state and County politicians who have been in cahoots with unions for years making our taxes unmanageable
By chief1 (2800), southampton on Dec 29, 17 10:35 PM
2 members liked this comment
Trump is definitely a jerk but I blame congress for taking from blue states to give to red states. Democrats have enacted policies that result in the poor in traditionally-Republican states already relying on the charity of New York and California.

Ya'll want to turn this into a zero sum game where one's political opponents suffer the brunt of the winner's policy choices? Alright then.
By Fore1gnBornHBgrown (8265), HAMPTON BAYS on Dec 30, 17 8:19 AM
Lets see how much longer NYers put up with public sector unions and their construction contracts as featured in the 12/28/17 issue of the New York Times.
By Duckbornandraised (184), Eastport on Dec 30, 17 3:37 AM
1 member liked this comment
The blue states have not been giving to the red States. Blue states have been taking hundreds of billions of dollars of write-offs for state taxes.
By chief1 (2800), southampton on Dec 30, 17 10:36 AM
1 member liked this comment
No matter which way you slice it, the list of states that receive more federal funds than they send in taxes is full of red states, and those that contribute more than they take in are overwhelmingly blue states.

If I remember correctly, Texas is the only red state in the top five givers.
By Fore1gnBornHBgrown (8265), HAMPTON BAYS on Dec 30, 17 10:46 AM
1 member liked this comment
The leftists who came up with that stat count Social Security retirement payments and the expenditures on military installations as "welfare".

So snowbirds retiring to red-states, and those states that host our national defense facilities are "takers", according to you.
By NateNewtown (99), east on Jan 1, 18 6:26 PM
Aren't they? Isn't social security one of those "entitlements" conservatives are always talking about cutting? Isn't the business that pops up around bases basically a subsidized economy?
By Fore1gnBornHBgrown (8265), HAMPTON BAYS on Jan 1, 18 7:03 PM
No different businesses around a factory or fishing port, nice try
By bigfresh (4666), north sea on Jan 1, 18 9:22 PM
Except that the decision to place a military base is made by a state actor, as opposed to private industry.
By Fore1gnBornHBgrown (8265), HAMPTON BAYS on Jan 1, 18 11:56 PM
Now you are maligning our military and ancillary businesses because of where a base is situated? Pearl Harbor is one of best natural harbors in the world, do you have a beef with that too?
By bigfresh (4666), north sea on Jan 2, 18 2:32 PM
Who's maligning? I'm saying that placing a military base in any location is federal stimulus.
Jan 2, 18 4:12 PM appended by Fore1gnBornHBgrown
Oh, I get it. You think "federal stimulus" is a dirty word.
By Fore1gnBornHBgrown (8265), HAMPTON BAYS on Jan 2, 18 4:12 PM
A military base may stimulate the surrounding economy but certainly not SUBSIDIZE it.
By bigfresh (4666), north sea on Jan 4, 18 11:45 AM
Whether you call it a "subsidy" or a "stimulus" the point remains that the federal government's decision to place a military base is a taxpayer-funded economic benefit to any locality.
By Fore1gnBornHBgrown (8265), HAMPTON BAYS on Jan 4, 18 11:57 AM
Based on the comments here, it's amazing how many Trump trolls and Zeldin suckers are just delighted with a scurrilous tax "reform" scheme that is 100% in service of corporations, the 1% and Trump at the expense of the rest of us. Erasing tax advantages that millions of Americans have enjoyed for decades is just a cynical way of raising taxes for homeowners and an ugly disincentive to ownership.
By Jolly Roger (31), Southampton on Jan 4, 18 1:59 PM
Come November, thus country has to be reminded of the insults the Republican party has bestowed upon us. The republican party can say all it wants about "trying to help the middle class" We all know that this is a LIE. Trump and is party members all are financially benefiting personally from this tax bill. All of the actions the Republican Party are putting forward HURT THE MIDDLE CLASS. The Republican Party has it out for the Democratic North East. Time to bury Trump and his party with a unanimous ...more
By jediscuba (71), Suthampton on Jan 4, 18 4:42 PM
Thanks President Trump!! 7 more years!
By bigfresh (4666), north sea on Jan 5, 18 6:46 PM