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UPDATED: Clerk-Treasurer’s Office Addresses Questions about Pre-Payment of 2018 Property Taxes in 2017

OFFICE OF THE CLERK-TREASURER

 

UPDATED WITH ADDITIONAL INFORMATION FROM THE IRS

FOR IMMEDIATE RELEASE

December 26, 2017
Contact:  Brian Lowe, Mayor’s Office, 802-735-3983

 

Clerk-Treasurer’s Office Addresses Questions about Pre-Payment of 2018 Property Taxes in 2017

 

Many Burlington property owners have been calling the Clerk-Treasurer’s Office asking whether or not they can pre-pay their 2018 property taxes.  The City of Burlington will accept pre-payment of property taxes for fiscal year 2018 only—that is, those property taxes for which property taxpayers have already been billed.  The City’s fiscal year 2018 runs from July 1, 2017 to June 30, 2018. Because taxes have not been determined for fiscal year 2019 yet and bills have not yet been issued, the Clerk-Treasurer’s Office will not accept payment for taxes after the current fiscal year.  So, it is possible to pre-pay your property taxes, but only for the first half of 2018.

 

Attached is a link to the Vermont League of Cities and Towns’ statement about the issue, and embedded in the article is a link to a podcast of a Vermont edition interview with Vermont’s Commissioner of Taxes that may answer some questions:

 

https://www.vlct.org/news/federal-tax-bill-and-municipal-property-taxes

 

UPDATE FROM THE IRS:

The Internal Revenue Service (IRS) has issued a clarifying advisory consistent with the information previously shared by the City of Burlington. The IRS Advisory is now included below:

 

IRS Advisory: Prepaid Real Property Taxes May Be Deductible in 2017 if Assessed and Paid in 2017

IR-2017-210, Dec. 27, 2017

WASHINGTON - The Internal Revenue Service advised tax professionals and taxpayers today that pre-paying 2018 state and local real property taxes in 2017 may be tax deductible under certain circumstances.
 
The IRS has received a number of questions from the tax community concerning the deductibility of prepaid real property taxes. In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the real property taxes are assessed prior to 2018.  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.
 
The following examples illustrate these points.
 
Example 1:  Assume County A assesses property tax on July 1, 2017 for the period July 1, 2017 – June 30, 2018.  On July 31, 2017, County A sends notices to residents notifying them of the assessment and billing the property tax in two installments with the first installment due Sept. 30, 2017 and the second installment due Jan. 31, 2018.   Assuming taxpayer has paid the first installment in 2017, the taxpayer may choose to pay the second installment on Dec. 31, 2017, and may claim a deduction for this prepayment on the taxpayer’s 2017 return. 
 
Example 2:  County B also assesses and bills its residents for property taxes on July 1, 2017, for the period July 1, 2017 – June 30, 2018.  County B intends to make the usual assessment in July 2018 for the period July 1, 2018 – June 30, 2019.  However, because county residents wish to prepay their 2018-2019 property taxes in 2017, County B has revised its computer systems to accept prepayment of property taxes for the 2018-2019 property tax year.  Taxpayers who prepay their 2018-2019 property taxes in 2017 will not be allowed to deduct the prepayment on their federal tax returns because the county will not assess the property tax for the 2018-2019 tax year until July 1, 2018.
 
The IRS reminds taxpayers that a number of provisions remain available this week that could affect 2017 tax bills. Time remains to make charitable donations. See IR-17-191 for more information. The deadline to make contributions for individual retirement accounts - which can be used by some taxpayers on 2017 tax returns - is the April 2018 tax deadline.
 
IRS.gov has more information on these and other provisions to help taxpayers prepare for the upcoming filing season.

 

                                                                                                                             

 

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