By JOHN HOWELL -- Most people don't rush to pay taxes before they are due. But that's what some Warwick taxpayers were doing in the waning days of 2017.
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Most people don’t rush to pay taxes before they are due.
But with the new federal tax law limiting the deduction for state and municipal taxes to $10,000 for the calendar year, that’s what some Warwick taxpayers were doing in the waning days of 2017. And, in fact, there were even a few taxpayers looking to prepay their taxes for 2018 even though the city is at least five months away from passing a budget and setting a tax rate.
“We’re not doing that,” William Miranda, deputy tax collector said Thursday of prepayments on taxes for 2018-19. Apart from not knowing what the rate would be, Miranda explained the city is not equipped to handle the accounting of prepayments. Besides, Miranda doesn’t believe it’s permissible.
He was armed with the printout of an email from the Internal Revenue Service that in part reads, “A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.”
While the issue is moot now that it is 2018, Brian Daniels, executive director of the Rhode Island League of Cities and Towns issued a memo to municipalities last year that prepaying taxes is more complicated than a straight forward, “not deductible.”
He writes, “The IRS guidance on deductibility is not essential in making a local determination whether to accept pre-payments. The deductibility issue will be between the taxpayer and the IRS. Some communities have expressed willingness to accept property tax payments toward estimated taxes in the next tax year, while others have noted potential challenges.”
Daniels advised municipal administrators to contract their solicitors to determine whether to allow pre-payments beyond the current fiscal year.”
There, however, was no reluctance on the part of the city to accept third and fourth quarter payments. Miranda said there wasn’t exactly a stampede to pay taxes, but as of Thursday a hundred or more taxpayers had come into the Annex office to complete their payments for the current year.
What he found ironic is that some of the taxpayers renowned for waiting until the 11th hour to make quarterly payments were rushing in to beat the New Year. Those deductions evidently made it worthwhile.
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richardcorrente
As a mortgage banker for the last 40 years, I have analyzed thousands of tax returns and have seen this technique used countless times. It doesn't save the taxpayer much, but it does give them a tax deduction this year rather than next and that makes the procedure popular.
I don't think the IRS will ever have a problem with it and the cities and towns shouldn't complain about getting paid faster either, regardless as to the new limitations. They won't effect the vast majority.
Happy 2018 everyone.
Rick Corrente
Bankers Mortgage Corp.
The Taxpayers Mayor
Thursday, January 4, 2018 Report this
CrickeeRaven
As one of the many mortgage brokers who wrote easy loans during the housing bubble, the fake "mayor's" statements are unworthy of serious consideration. The fact that he also makes a blatantly political statement at the same time is further proof of his poor grasp of ethics.
Honest, taxpaying voters will no doubt overwhelmingly reject his candidacy again this November.
Thursday, January 4, 2018 Report this
Thecaptain
So here is a question that I should have asked long ago. If the Fake Mayor was a mortgage broker, and himself entered into a "subprime mortgage" aka predatory loan, and due to that as he has openly claimed , lost his house, how many of his clients did he entice into entering the same type of predatory loan which caused them to get caught in the sub prime bubble?
Fair question I think, no?
And if he was to answer no one, doesn't that speak volumes of his intelligence as a broker? One would think that the last person to get sucked into a sub prime mortgage would be a mortgage broker. Am I wrong?
Thursday, January 4, 2018 Report this
CrickeeRaven
Hello again Thecaptain:
You raise a very important point about the fake "mayor" and his claimed business expertise: Why should anyone trust a mortgage broker who lost his own home to tax sale and blames it on the lender? As you rightly point out, he either lured potentially hundreds of homebuyers into predatory mortgages and pocketed the commission, or failed at these easy pickings and took out a mortgage on his residence that he should have known was suspect.
Either way, it speaks very poorly about his business practices and his personal character; luckily, he will not restrain himself from publicly displaying his poor judgment, giving honest, taxpaying voters all the information they need to reject his candidacy again.
Friday, January 5, 2018 Report this