BURLINGTON — Municipal officials have been inundated with requests from property owners who want to pay taxes early in order to take advantage of savings before Jan. 1 when the new federal tax law goes into effect.
The Tax Cuts and Jobs Act, which President Donald Trump signed Dec. 22, overhauls the national tax code. The law will cap the income tax deduction for state and local taxes at $10,000; however, there is no limit for 2017. That change, which goes into effect with much of the law on Jan. 1, is prompting many to pay local property taxes in advance of the deadline on Sunday.
“When the bill passed through the Senate, there was some confusion as to what cities were actually able to do,” said Brian Lowe, chief of staff to Burlington Mayor Miro Weinberger. Lowe said the city has received nearly 200 inquiries from residents who want to pay taxes early.
The Vermont League of Cities and Towns advised municipalities not to accept prepayment of next year’s taxes that have yet to be billed, because that could run afoul of state laws and the new federal tax law. The Internal Revenue Service on Wednesday clarified that people can take advantage of the deduction for taxes that have already been billed.
“It’s clear now what cities like Burlington can do. They can allow people who would like to prepay, to prepay for anything they have been billed for,” Lowe said.
Burlington and other municipalities have already billed property owners for the 2018 fiscal year, which includes the first two quarters of calendar year 2018. Those payment dates are usually March 12 and June 12, but city taxpayers can pay those installments before Jan. 1. The city’s 2018 fiscal year runs from July 1, 2017, to June 30, 2018.
“If you’re over the $10,000 (cap on deductions) and you’re not going to get a benefit in 2018, pay that in December — you’ll get a federal tax benefit,” said Rick Wolfish, a certified public accountant interviewed on the Dec. 21 episode of Vermont Public Radio’s “Vermont Edition.”
Lowe said that despite the interest from many in paying taxes during the waning days of 2017, the prepayment process isn’t causing Burlington officials much trouble.
“There’s no backlog or lines or anything. It’s pretty straightforward,” Lowe said.
