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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