Town of Hempstead Receiver of Taxes Don Clavin and many other municipal tax receivers are reeling from the veritable flood of property owners who descended upon their offices to prepay their 2018 property taxes before the January 1st deadline when the new federal tax code took effect. The homeowners stormed local government offices, spurred on by an Executive Order advanced by the Governor, to prepay their 2018 property taxes and deduct those payments on 2017 income tax returns. As a result, Clavin’s office and many others have been slammed with excess costs for computer programming, staff overtime, printing and security, among other expenses. In response to the substantial and unprecedented costs, Clavin has asked Senator Elaine Phillips (R- Flower Hill), and Assemblyman Ed Ra (R-Franklin Square) to sponsor state legislation that would provide for state reimbursement to local governments for the excess costs of complying with the Governor’s Executive Order, thereby minimizing the direct impact on local taxpayers.
“I want to thank Senator Phillips and Assemblyman Ra for stepping up to help local governments and area taxpayers as we all work to cope with the impact of the new federal tax code,” said Clavin. “By sponsoring legislation that would reimburse towns and other local governments for the excess costs of complying with the Governor’s Executive Order on the prepayment of 2018 property taxes, the impact of the costs to local governments and taxpayers can be minimized.”
The Governor signed an Executive Order on December 22nd, directing local towns to accept the prepayment of 2018 property taxes as a mechanism to facilitate property taxpayers making advance payments before the new federal tax overhaul capped deductions for such payments. The ensuing rush of taxpayers, scrambling to beat the deadline, brought about unprecedented costs for local governments that processed the payments. In the case of Hempstead Town, Clavin estimates that his office’s excess costs (costs beyond his office’s ordinary operating expenses during typical tax collections) may total over $100,000.
“Local governments all over the region are struggling to ‘make ends meet,’” said Phillips. “When they are hit with substantial increases in costs associated with an Executive Order by the Governor, I believe we have a responsibility to extend a helping hand to cover those excess costs.”
Clavin described a host of obstacles that his office had to overcome to accommodate prepayment of property taxes, which resulted in substantial excess costs. First, Clavin’s staff and the town’s Information and Technology Department had to develop a mechanism to access 2018 general tax amounts quickly for the flood of taxpayers that would come across their doorstep at the tax office. Second, the staff worked extensive overtime hours, including weekend hours. The office brought in extra public safety and security personnel due to the large crowds and the significant increase in the number of deposits being processed. The staff had increased printing costs associated with producing temporary receipts and temporary documents with payment amounts. Clavin’s office will also have increased costs attendant with entering all of the payments in the town’s computer system after-the-fact, since all of the payments that were made at the tax office were manual payments (not yet entered into the town’s computer system). The town will also have increased costs associated with mailing computerized receipts for all of the customers who visited the tax office in person. The Receiver issued two town-wide automated phone calls to ensure that all taxpayers knew about the program and could avail themselves of the prepayment opportunity. Finally, Clavin noted that his town will have to provide an unprecedented number of discounts that are given for making an entire year’s property tax payment in one lump sum instead of two semi-annual payments. The Receiver stated that the number of full-year payments, all of which qualify for discounts, will be up dramatically this year due to people making full year payments to maximize deductions on their income tax returns. In total, Clavin estimates the range of excess costs incurred by his office could reach over $100,000.
“Hempstead Town and other municipalities have been slammed with excess costs in order to help taxpayers cope with the impact of the new federal tax code,” said Ra. “The least that our state can do is to help mitigate the burden that would otherwise be fully borne by localities and their taxpayers.”
“Helping taxpayers deal with the impact of the new federal tax code has been rewarding,” concluded Clavin. “Because of our work, many taxpayers will be able to reduce their tax burden by deducting the 2018 property taxes that were paid on their 2017 income tax returns. At the same time, the cost of helping our taxpayers is substantial, and I am grateful that Senator Phillips and Assemblyman Ra are helping local governments to blunt the impact of those costs that would fall directly on the shoulders of local taxpayers if it were not for their assistance.”