Town collects $2 million in early taxes before 2017 deduction disappeared

More than 400 Shelburne taxpayers made early property tax payments in the closing days of 2017 to take advantage of an income tax deduction that will disappear this year under the new federal tax law.

In his weekly report to the community, Town Manager Joe Colangelo noted a “constant flow of people coming in to pay their March 2018 property tax installment” before 2017 came to a close.

He estimated about 425 payments were made totaling more than $2 million. That’s more than three times the usual total for early payments made toward the third bill of the tax year, Colangelo noted.

As in many other communities in Vermont and across the country last week, sweeping changes to the national tax code prompted many taxpayers to act quickly to take advantage of deductions that will end this year.

One key provision of the new tax law passed in December will limit to $10,000 the income tax deduction for state and local taxes starting in 2018.

The unlimited deduction still applied to taxes paid in 2017. The IRS last week clarified the change saying filers this year will be able to claim without restriction property taxes paid in 2017 as long as they were billed at the time they were paid.

This appeared to include property tax payments that are due in early 2018 for which municipalities had already sent out bills.

Shelburne breaks tax payments into three installments paid in August, November and March, so property owners here already had a bill due in 2018 prior to the start of the new year.

In neighboring Charlotte and Hinesburg, however, tax bills are sent out in August with full payments due in November. So tax bills for 2018 were a long way off when the federal legislation passed last month.

Still, that didn’t stop some from paying early anyway.

“We’ve always accepted pre-payments,” said Charlotte Town Clerk and Treasurer Mary Mead. However, Mead said, at this time of year she has usually collected less than $10,000. She said approximately $890,000 had been paid before 2017 ended.

Hinesburg has the same billing cycle as Charlotte. Just a few there stopped into the town offices to pay ahead of the new year.

Town Clerk and Treasurer Missy Ross said as of Dec. 29, she had received early payments from just six taxpayers totaling $45,548.45.

Staff reporters Chea Waters Evans and Mark Kobzik contributed to this report.

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