With an Eye on Federal Tax-Cut Bill, Montgomery County Examining Prepayment for Property Taxes

With an Eye on Federal Tax-Cut Bill, Montgomery County Examining Prepayment for Property Taxes

Policy might result in lower payments for certain taxpayers before federal legislation takes effect

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County Council member Roger Berliner

Bethesda Beat file photo

Montgomery County officials are quickly working to set up a system to let local residents prepay property taxes before the end of the year to take advantage of a federal deduction being capped in a Republican tax-cut bill.

County Council member Roger Berliner said Tuesday he plans to introduce a bill when the council reconvenes in January that would be retroactive, to enable the county to accept property tax prepayments.

By prepaying property taxes, some residents who own high-value homes in the county—such as those worth more than $1 million—could take advantage of their current ability to deduct the full payment. The Republican tax bill that the Senate approved Wednesday morning limits state and local property tax payment deductions to a $10,000 cap.

The House is scheduled to vote on the same version on Wednesday. President Donald Trump plans to sign the bill into law.

Berliner said prepayment could help some county taxpayers avoid higher tax payments before the cap is in place.

Timothy Firestine, the county’s chief administrative officer, said Tuesday that the county has received several questions from taxpayers about whether they could prepay next year’s property taxes.

“We’re trying to accommodate our taxpayers, but we are not giving tax advice,” Firestine said. “If they feel it’s advantageous to prepay property taxes, then we’ll trying to put something together to make that work.”

Firestine said that as of Tuesday evening, the county was not yet accepting checks for next year’s property tax payments, but is trying to determine the logistics needed to accept them. He said the county will have to set up a system to monitor which taxpayer sent a prepayment and make sure it gets applied to the correct account.

He said taxpayers could estimate the amount of their property tax bills by using their previous tax payment.

The Republican tax bill is expected to result in higher taxes for thousands of Montgomery County residents who itemize their federal returns to deduct local and state income and property taxes. Earlier this year, Council member Tom Hucker said about 266,000 households in the county use the state and local tax deduction in Montgomery County.

While state law has authorized the county to pass a law to enable residents to prepay property taxes, the council has not yet done so. Berliner said he’ll introduce the bill in January and expects his colleagues will support it. By making it retroactive, it will allow the prepayments to be accepted before the end of 2017.

Both Berliner and Firestine said Tuesday that county attorneys have reviewed the proposal and they believe the retroactive law would withstand legal scrutiny.

Firestine said the county is aiming to finalize a system to accept prepayments this week. 

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