Turmoil Grows Over Prepayment Of Property Taxes

A  matter of immediate importance to many property owners – prepayment of property taxes – is rapidly descending into chaos and unfairness.


Can you prepay property taxes before the end of this year or not? You can for purposes of getting a deduction in 2017 under the new federal tax law, but the problem is whether your county will accept prepayment. It varies by county, which is obviously unfair, and reports are very confusing on what the rules are.

If you own in Cook County, try to prepay your 2017 taxes (due in two halves in 2018) and you’ll find that the county is only set up to allow you to pay 55% of the prior year’s tax. The place to do so is linked here.

But look here and you’ll see suburban McHenry County allows you to prepay a full year’s taxes, apparently, but you have to sign an agreement by Dec. 29. In fact, this article says you can prepay two years worth of taxes. (I don’t know how far out the federal tax code would allow deductibility, however.)

Nearby Kendall County, however, reportedly, is “taking a beating” from irate taxpayers because they can’t accept any prepayments!

Here’s a Daily Herald article discussing disparate rules in a few other suburban counties.

Compare that to Wisconsin. It was easy to prepay a full year based on one county I looked at — Walworth. Bills there came out a couple weeks ago for 2017 taxes due in two installments in 2018, but you could send in a full check anytime.

We’re not alone. “Residents can’t prepay property taxes in Montgomery County in Maryland, but they can in Fairfax and D.C,” according to a Washington Post article linked here. So, Montgomery County just announced a special session to to change its rules. In New Jersey, a state lawmaker is pushing the governor to expedite help to allow early prepayments.

This is important because many, many taxpayers will not be able to deduct property taxes under the new federal tax law after this year, or they will find that of no value because of the big increase in the standard deduction. Either way, prepaying to make them deductible this year will save many taxpayers thousands of dollars.

I’ve marked this article “story developing” because I expect a firestorm to develop over the unfairness of having different rules. Also, most of those rules appear not to be a matter of law but instead just an issue of what procedures various counties happen to have set up. I suspect there will be litigation over whether those different administrative procedures can properly be the basis for very different federal tax liabilities. Maybe Congress or state legislatures will act somehow to impose consistency in how much can be prepaid.

Source: ZeroHedge