CROSS RIVER, N.Y. – In April, New York State approved a law that gives public school boards the authority to create a charitable contribution fund in which taxpayers can donate to the school district in lieu of paying their school taxes. Because these charitable donations would, in theory, be tax deductible up to 95 percent, this was seen as a way for New York State to circumvent a new federal law passed three months earlier that caps property tax deductions at $10,000.
Most school boards around Westchester are taking a wait-and-see approach before implementing the fund, and Katonah-Lewisboro is no different. Superintendent Andrew Selesnick, at the board’s July 12 meeting, said he believes there are too many open-ended questions to move forward at this point.
“One of the things that we’ve been waiting for is regulations to go along with these laws to come down from both the IRS and New York State,” Selesnick said. “No regulations have as of yet been issued.”
Selesnick, though, said a memo issued by the IRS called into question whether these donations would be tax deductible. Selesnick said the district has met with its four towns and its counsel, both of which are hesitant to enter into something without having clear regulations.
“We don’t quite know what all the risks might be,” Selesnick said. “Our law firm’s guidance at the moment is to wait and see and to wait for that further guidance to come.”
Though he does not approve of the federal government’s law, trustee Dr. William Rifkin said New York State’s response is an abuse of charity laws.
“This conversation is like: Will we get caught? Will it be legal? Will we get sued?” Rifkin said. “I don’t like the law any more than anybody else likes the law, but we are not a charity...Those laws are there to encourage people to give to charity, not to give to the Katonah-Lewisboro School District.”
Rifkin said he believes the IRS will ultimately “eviscerate” the law. But, he said, that’s beside the point.
“I feel no need to wait for us to make a decision,” Rifkin said. “I just think it’s a bald-faced misuse of law.”
Scott Posner, vice president of the school board, said the board should wait for more guidance before moving forward. However, the IRS’ decision will ultimately revolve around whether the donations are tax deductible, which is not the concern of the Katonah-Lewisboro Board of Education.
“The taxpayer will make their decision based on whether they’re willing to roll the dice and they’re going to have to pay penalties and interest and everything,” Posner said. “That’s not our decision. Our decision is to be whether we’re taking on increased liability for the district. If we get to the point where we’re comfortable that there’s no extra liability for the district, I think we should be doing it and we should be giving our taxpayers that option. Ultimately, it’s their choice as to whether they’re going to be the ones to run that risk, but we shouldn’t be making that decision to prevent them from having that option.”
The board took no action and will instead wait for more guidance. To date, Scarsdale is the only public school board in Westchester that has voted to create the fund.