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Thursday, December 28, 2017

Confusion surrounds effort to allow taxpayers to pay 2018 property taxes in advance

After many local residents paid their 2018 taxes early, the federal government announced that prepayment can only be done in limited circumstances.

The Fairfax County Department of Tax Administration (DTA) announced earlier this week that it has extended its hours for people who want to pay their 2018 taxes in advance – before the new federal cap on real estate deductions takes effect.

The tax bill signed into law by President Trump Dec. 22 caps state and local deductions on federal tax returns at $10,000, beginning for the 2018 tax year.
Thousands of Fairfax County taxpayers prepaid their 2018 taxes, in person or online, in order to take advantage of the deductions before they are eliminated. The county collected nearly $16 million in tax prepayments on Tuesday alone, the Washington Post reports.

But then the Internal Revenue Service issued a bulletin Dec. 27 stating that prepaid property taxes might not be deductible in all circumstances, creating confusion among taxpayers and local government officials.

 “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,” the IRS states.

“A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017,” the IRS says. “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.”

Fairfax County hasn’t set its tax rates for 2018 yet; that is expected to be done in April 2018. The DTA had advised taxpayers who want to prepay to estimate their tax bill based on their 2017 taxes and said that any difference would be billed or refunded later.

As a result of the IRS bulletin, taxpayers and administrators who spent hours during the holidays figuring out their tax situation and prepaying their taxes might have been wasting their time.

“We don’t know the full impact of that [IRS] statement yet. We’re still studying that,” Fairfax County spokesperson Jeremy Lasich told the Washington Post. He said the county would devise a reimbursement plan if it cannot accept the prepayments.

Bailey’s Crossroads resident Brian Lowit, who was quoted in the Post, said he wasted hours trying to talk to his mortgage company and figure out whether to prepay his 2018 property taxes with the prospect of saving more than $1,000. Immediately after prepaying, he learned of the IRS bulletin. He tried to stop the payment but doesn’t know if it went through.

“It’s a nightmare,” said Lowit, the Annandale Blog’s ad director. “I’m definitely frustrated and irritated. The rush to get that bill done screwed everyone up. It’s insanity and it’s stupid.”

Fairfax County administrators were trying to be helpful by encouraging people to pay in advance and keeping their offices open late to make that easier, and now they might have to put in many extra hours to send out refunds.


  1. Instead of venting frustration with a federal tax CUT (Hello?) maybe you should be focusing your frustration & advocacy on Fairfax County Government and VA State Government and urge them to cut taxes and reform spending. Seems to me you've been subsidizing your expensive property on the backs of a Federal tax deduction.
    People want all of the benefits with as little of the cost. Time to pay up NoVA! You chose to live in a high cost area. You shouldn't have to rely on a federal subsidy to get by if your home taxes are more than $10,000. You should buy a home in a place you can afford.

    1. "Time to pay up NoVA" We get pennies on the dollar we spend in our state income taxes (well known fact that every dollar NoVa residents spend in VA taxes goes to other areas of the state).

      The tax cut is reckless. People have every right to be angry about it. Will I see a benefit to my paycheck? Yes. But I would rather the higher taxes and not have the deficit raised by trillions of dollars and putting this undue burden on state and local governments which are the ones that invest in our K12 education, roads, police...

      Not to mention at the national level we need to be investing in the military and defense, especially as it appears new wars are on the horizon yet we have boats crashing into each other because of a lack of training, jets that can't fly due to lack of maintenance and a lack of ammunition (we've been running out of hellfires).

      But go ahead... defend the tax cut...

  2. The hypocrisy of Liberals complaining about the federal government running deficits is beyond deplorable....As if Democratics and their demands for government controlled and funded health care and “Free College” actually care about the deficit.

    Gee...I even remember when Obama went on late night TV and said that the deficit is not a problem now....but when a Republican is a President...then the deficit becomes unpatriotic.

    1. Obama reduced the deficit from 1.4 trillion per year when he walked into office (9.8% of GDP) to 585 billion per year (3.1% of GDP) when he left. Some of that reduction was due to sequestration which was irresponsible on behalf of both parties, but in the end it got the deficit down. You indicating that the Democrats are bad to the deficit and pointing to heathcare as a cause is just plain wrong -- The facts speak otherwise.

      As to the "free college" idea being bad for the deficit - that I agree with (at least most of the ideas I've seen tossed around - they are either going to kill the deficit or hike taxes as irresponsibly as the GOP just cut them).

  3. "But I would rather the higher taxes and not have the deficit raised by trillions of dollars "

    Umm, you DO remember when and how the deficit ballooned to its current level, right? Or did you just suddenly start caring about the deficit now? Previously, you were paying higher taxes AND the deficit was growing out of control. If you're going to make an argument, at least stick to the facts.

    1. The deficit last ballooned due to the great recession and the work enacted to get us out of it. Completely different scenarios. We aren’t in a recession bordering on depression. We have historically low unemployment. There is work to be done to fix issues like underemployment and stagnant wages, but the tax bill is not it. Not sure I know of a magic bullet, but I know trickle down economics has never, ever worked out for anyone except the rich.

  4. Thank you Jeffrey you have tried to educate us all in a time of confusion. Facts are facts and regardless of who or what you want the Facts stay as they are. Thanks again!

  5. Thank You Jeffery-
    Facts are just that facts.

  6. Cash for clunkers. Stimulus—“Guess those shovel-ready projects weren’t so shovel-ready after all.” Guffaws. Obamacare (just the failed website online) and on and on...
    Again very funny that people are concerned that the deficit might increase when taxpayers are allowed to keep more of their earned money. But no problem if you keep more of my money and the deficit balloons. Again if you believe that you do not pay enough in taxes you are free to pay additional taxes to any government entity that you like. Growing the economy via tax cuts generally helps all sectors; increasing taxes only helps the public sector and in terms of entitlements so much is wasted going through/supporting the hugely inefficient government bureaucracy at all levels, that only a fraction of those dollars actually ever make it to the ultimate intended beneficiary.

    1. Amen! Couldn't agree more with "But no problem if you keep more of my money and deficit balloons." Why are so many people (based on election results) in this area OK with status quo tax rates, or tax increases AND deficits? But if taxes are ever cut, then they immediately worry about spending?

      We must cut spending with tax cuts. Govt programs should be focused on helping those in need not wasting XX cents on every dollar of benefit.

      Letting Americans keep more of the money they earn for themselves is always good policy.