Village of Scarsdale Will Not Accept Prepayment of Real Estate Taxes for 2018

(December 24, 2017) The Village will not accept prepayment of 2018 property taxes - see above

With the new tax bill set to pass both the House of Representatives and Senate this week, many in Scarsdale are scrambling to do whatever they can to shelter themselves from an onerous new provision in the bill that prevents the deduction of state, local and more than $10,000 in real estate taxes. With the average Scarsdale homeowner paying $30,000 a year in real estate taxes, many wondered if they could pay their 2018 property taxes early and deduct them from their 2017 tax return.

According the New York Times, prepayment of real estate taxes is permitted in some municipalities in New York State. The article says, "While the writers of the final bill had the opportunity to prohibit prepayment of local property taxes, they did not do so. So if you can save money on your taxes overall by paying your property taxes this year, when the $10,000 cap is not yet in effect, you should seriously consider it. But before you start lining the money up, check with your local taxing authority about whether it allows prepayment — and how much you can actually pay in advance. There are different rules in different jurisdictions."

Many called Scarsdale Village Hall to find out how to make their payments, but have been distressed to learn that Scarsdale will only return your check. Why?

Village Treasurer Mary Lou McClure says, "We cannot accept checks without an adopted budget, the related tax warrant and a tax roll. If someone were to send a check to the Village, we would need to return it to the maker of the check without cashing it because we have nowhere to apply the payment. We cannot accept deposits against a future receivable. Other communities may have fiscal years beginning January 1 and/or have the second half school tax due in January. In both cases, a budget, warrant, and tax roll would have been delivered to the tax collecting officer. Generally those communities are cities and towns which have different fiscal years than a village. The Village has researched the warrant issues and consulted with, among other parties, the New York state Comptroller's Office, NYCOM, the NYS GFOA, the County Finance Commissioner, the County Tax Commissioner and other legal sources." Read a full explanation from the Village here.

Commenting on the policy, one reader wrote, "Well, I just found out that Scarsdale is not willing to accept prepayment! I am outraged as I would think many will be."

Another said, "Having spoken to my tax advisor, it appears that if I proactively sent Scarsdale a check (say for 90% of last years taxes), there is actually nothing in law that would specifically prohibit Scarsdale from cashing that check. Scarsdale's systems might not be able to handle that, but this could easily be solved, for example, by recording my payment in a spreadsheet. I am hoping someone can be very specific about why Scarsdale could not legally cash a check that I proactively sent to it."

Other readers noted that the Town of Southampton, which is the taxing authority for many villages on the East End of Long Island, is accepting the earlier payments. In fact, they normally bill for the following year in December and require payment by January 31, 2018. Readers say that these prepayments will be deductible from their 2017 return.

The New York Times estimates that Westchester County residents are among 12 national counties that take the highest SALT deductions, with 47% of residents taking an average deduction of $34,300. With the loss of SALT and the deduction of a good portion of real estate taxes, many Scarsdale residents will clearly be worse off in 2018 than they were this year.