More than a few eyebrows were raised last week when McLean County Treasurer Rebecca McNeil said the county would not accept prepayments of property taxes due in 2018.
After all, other counties — Cook, Champaign, Ford, Livingston, Logan, Peoria, Tazewell and Woodford — are among counties making the change, in addition to states like New Jersey, New York and Massachusetts. But McLean and DeWitt counties, like the states of Georgia, Missouri and California, are saying no.
Why the fuss? Well, the new tax law signed last week by President Donald Trump appears to impose a $10,000 cap on the federal deduction that you can use for state and local income, property and sales taxes. The Associated Press, however, said it's unclear what deductions the IRS will accept, because the new law specifically bars taking deductions for income taxes paid ahead of time, but it silent on prepaid local property taxes.
The wide belief, however, is that people who pay more than $10,000 in property taxes could deduct that amount as long as the taxes are paid before the new year starts. The move, as reported by Derek Beigh, allows people to deduct an extra year of payments from their 2017 federal taxes before a cap on state and local tax deductions is added in 2018. The deductions do not apply to state income tax filings and the change will not affect companies that can continue to deduct their state and local tax payments as business expenses, AP said.
But "(McLean County) has no process ... to book and track receipts of property taxes which have not yet been billed and which are not yet due and owing," McNeil said in a statement for Beigh's story. "There’s nothing in statute which directs the county collector to accept prepayments. ... Counties that are accepting prepayments have made an administrative decision to do so.”
Given the various interpretations, it's probably time for the Department of Revenue and the Attorney General's Office to formally weigh in.
Woodford County talked through the issue with its software vendor. Champaign, Logan and Piatt counties have offered the service before. Ford and Livingston counties are letting people pay part, but not all, of their bills.
To be sure, the deduction won't affect all homeowners. The key is the amount you usually pay, and whether that tops the $10,000 threshold. In some high-price property states like California, Connecticut, New York and New Jersey, where the average deduction tops $17,000, the change will have more impact, according to The Associated Press.
In Illinois, the county-by-county differences reflect the independence of the individually elected treasurers who are charged with issuing tax bills and collecting and distributing tax money. McNeil said the "integrity and validity" of the process comes into play with her decision.
So, either some McLean and DeWitt county residents are losing out on a chance to save money, or other counties may well face problems for making a rash decision.
Only time will tell.