A twist...some residents argued to pay taxes early

Warwick Beacon ·

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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