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Towns see surplus of prepaid property taxes

Late last month, tax collectors in North Country towns began receiving a flood of prepaid 2018 property taxes. In reaction to the federal tax reform, the governor had allowed taxpayers to deduct 2018 taxes on their 2017 income tax returns.

On Dec. 21, 2017, the Franklin County Legislature held its last meeting of the year, adopted its 2018 budget and, as usual, dated the tax warrant for Dec. 31 so tax collection could begin thereafter. When Gov. Andrew Cuomo issued his executive order on Dec. 22, suspending provisions of the state’s Real Property Tax Law that barred prepaying 2018 property taxes, the county government leaped into action. The same day, according to the county’s Real Property Tax Services Director Jeanette Tummons, the legislators changed the date on the warrant to Dec. 21, which allowed the collection of local property taxes for 2018 to begin immediately.

Property owners in several North Country towns reacted quickly.

“The media got the word out,” said Holly Huber, the tax collector for the town of Brighton. “I didn’t have to do any publicity.”

Huber has already received $300,000 in prepaid 2018 taxes, almost half of the $642,000 the town expects to collect for the year.

Lauren LeFebvre, who is both clerk and tax collector for the neighboring town of Franklin, said the checks “just started rolling in.” LeFebvre said that when she heard the news about the federal tax reform bill and the governor’s response, it hadn’t dawned on her that it would affect her so directly. In Franklin, property owners prepaid $206,000 out of the $1.2 million the town will collect for itself in 2018. (Another $1.4 million is sent on the county.) In a normal year, LeFebvre said, she receives about $10,000 in prepaid property taxes.

In Harrietstown, town clerk and tax collector Patricia Gillmett said she had not yet calculated the total amount of prepaid taxes, but $75,000 in payments were received on the very first day checks began to come in. Her deputy, Colleen Harvey, works full-time with Gillmett between Jan. 1 and March 31 to collect and process $2,451.547.75 in town property taxes.

In his executive order, Cuomo noted that under the new tax law New Yorkers will pay an extra $14 billion in federal taxes. He also pointed out that New York state is the number-one “donor state” in the union; New York sends $48 billion more to Washington than it receives.

The governor’s executive order suspended a provision (Section 904(1)) of the Real Property Tax Law that required legislative bodies to date their warrants Dec. 31 and allowed them to start collecting taxes as soon as they adopted a budget or after the date of the governor’s warrant. The order also suspended a provision (Section 920(2)) that prohibited collection of the ensuing year’s taxes in December of the previous year, and another (Section 928-1(1)) that forbade partial payments without a resolution from local legislative bodies. Gillmett, who has been a tax collector for over 40 years, said she has never seen the state do this before.

Taxpayers reacted quickly. “Most of the checks came in after Christmas,” said Huber. “We go by the postmark.”

LeFebvre said some people put 2017 dates on their checks but didn’t manage to get 2017 postmarks. “You can’t fault them for trying,” she said.

Gillmett said she was surprised how long it took some pieces of certified mail to get to her. She received her last 2017-postmarked mail on Jan. 5; the letters had come from California and Florida.

There are many lakefront vacation homes in all three towns. As LeFebvre noted, these taxpayers were especially motivated to prepay because they are writing checks for their properties here and also for their primary residences elsewhere. The new Tax Cuts and Jobs Act that President Donald Trump signed into law on Dec. 22 caps the amount of state and local taxes that can be deducted from a federal income tax return at $10,000. There was no cap in the old regulations, which had been in place without major overhaul since 1986, the second Reagan administration.

Tummons said Franklin County did not have to alter its procedures to respond to the governor’s executive order.

“It went very smoothly for us,” she said. “We already had everything done.”

The county prints the tax bills for the towns, and then it is up to the individual towns to distribute them. Although the governor’s order mentions school taxes, Tummons said neither school nor village budgets are ready in time to take advantage of the order.

Very few residents had received their bills in the mail when they heard about the governor’s executive order, but many sent in checks anyway, because the lifting of the prohibition on partial payments allowed them to do so. Tax collectors in the different towns dealt with the situation as a function of the town’s size.

Of the three towns the Enterprise contacted, Brighton is the smallest, with approximately 1,000 parcels. Huber, when a taxpayer contacted her, was able to look up individual bills in the tax rolls.

“It was not just the folks on the big estates,” she said. “A lot of regular folks paid ahead, too.”

Franklin is much larger; LeFebvre estimated there are 1,800 parcels in the town.

“When people called me, I suggested that they mail in the same payment as they did last year,” she said, “because the balance due would be minimal. A taxpayer actually came up with that idea.”

Franklin raised its property tax rate 1.8 percent this year, staying under the state-imposed cap.

Harrietstown is the largest of the three towns and, as Gillmett noted, “we have the majority of the waterfront.” In spite of that statistic, she expressed surprise that more summer residents didn’t prepay.

“It was not as many as I would have thought,” she said, “but a good number of local residents got their checks in.” She was able to get her tax bills in the mail by Dec. 29 and did not offer a estimating strategy to prepayers. “People guessed or paid what they paid last year,” she laughed. “It’s going to be a bookkeeping nightmare.” The veteran tax collector said she and her deputy will be calculating a lot of refunds and sending a lot of invoices for unpaid balances.

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