Government

Prepayment of 2018 Taxes by 12-31 Okayed by Governor: IRS Issues Guidance

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PISCATAWAY, NJ - Since the sweeping new Tax Law has been passed and signed by President Trump, millions of dollars in prepaid 2018 property taxes have swamped local Tax Collectors. There has also been confusion on timing and deductibility. TAPinto Piscataway has the answers on both. Today, Governor Christie issued Executive Order No. 237 which basically states that any payment that is postmarked by December 31st will count towards 2017. His order is here:

From the Office of the Governor:

Trenton, NJ -  Governor Chris Christie today signed the following Executive Order:

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Executive Order No. 237 - Directs the Director of the Division of Local Government to notify municipalities to accept payments for 2018 property taxes in calendar year 2017 and require them to credit those payments as received in 2017 if the payment is postmarked on or before December 31, 2017.

“The action I took today will ensure that local governments are flexible and accommodating of their local property taxpayers as we transition to the new federal tax code for 2018," Governor Christie said. "This executive order requires local officials to dedicate the resources and staffing to serve New Jerseyans who are planning in this way for their families and their futures."

The full order is here: http://nj.gov/infobank/circular/eocc237.pdf

Additionally, there is confusion as to how the IRS will address the deductibility of prepayments. They discuss the issue in the following link and identify the difference between estimating a bill and the actual billed amount. Most municipalities have identified the first two quarters of the year but not the third and fourth quarter.

Notably, from the IRS: "A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.  State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed."

You can read about their guidance below and be sure to consult your tax advisor or other professional for advice on how to proceed. Folks who use the Alternative Minimum Tax (AMT) and those who have their payments tied to their mortgages should pay especially close attention.

Read the IRS guidance here: https://www.irs.gov/newsroom/irs-advisory-prepaid-real-property-taxes-may-be-deductible-in-2017-if-assessed-and-paid-in-2017

TAPintoPiscataway.net is an online newspaper serving the Township of Piscataway.

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