By LINDA MOSS
An estimated 2,500 Montclair property owners, some waiting on a line that snaked out into the Township Municipal Complex’s parking lot last Saturday, forked over roughly $28 million during the past week or so to prepay their 2018 taxes, according to the municipal tax collector.
Not only local residents but people across New Jersey — as well as in other states, including New York, Illinois and Virginia — braved long lines to beat the clock. They were all trying to save money by filing 2018 taxes before new federal tax legislation went into effect Jan. 1. Under the bill championed by President Donald Trump, people who live in states with high local taxes will no longer be able to deduct them from their federal taxes.
Montclair, notorious for its high local taxes, made national news when its tax collector’s office announced that it would be open Saturday, Jan. 30, to accommodate the swell of people looking to prepay their 2018 bills.
Township Tax Collector Lidia Leszczynski said that when she and her staff got to their office Saturday morning there was already a line from their door to the parking lot at town hall. She opened the office 15 minutes early, at about 9:45 a.m. instead of the scheduled 10 a.m., to start to help people.
“We didn’t keep them waiting,” she said.
About 150 came Saturday alone to prepay their taxes, Leszczynski said. The week before that, property owners were flocking to her office at a rate of 50 to 100 a day.
The tax collector’s office handled about 5,000 prepayment transactions, Leszczynski said. But a transaction represents payment for a single quarter, and some people were paying their first-quarter 2018 bill, some paid their first- and second-quarter 2018 bills and others paid for the full year.
“I would say the majority paid their first- and second-quarter bills,” Leszczynski said.
Those who prepaid took a bit of a gamble because of the confusion over whether the tax prepayments will wind up helping them. The new legislation didn’t address the issue of whether the 2018 prepayments will be deductible from federal income tax returns. Then last week the Internal Revenue Service issued a notice saying that the 2018 prepayments would be deductible only for those who had a tax bill from their local governments and paid them by Dec. 31.
In Montclair, property owners had only their first- and second-quarter 2018 tax bills. But before the IRS issued its clarification, some residents had estimated their second-half 2018 taxes and paid their entire bill for that year. It’s unclear if that full-year amount can in be deducted.
Claudia Erwin last week — along with her husband, Brian, and their 7-year-old son, Darius — was among the hundreds of Montclair residents who made the trip to the tax collector’s office to prepay their taxes.
Under the new federal tax law, the amount of state and local taxes that can be deducted on federal income tax returns is limited to $10,000. The Erwins live in the South End, have been in town for nine years and pay more than $10,000 annually in property taxes. They were advised to prepay.
“We did the homework,” Claudia Erwin said. “I talked to my accountant. I talked to my mortgage lender, because I think there’s a lot of confusion as to people are thinking if it [their property-tax money] goes into an escrow account there is nothing you can do.”
For more than a week Leszczynski said that her department has been inundated with emails, phone calls and visits from residents who want to prepay their taxes at a rate of 50 to 100 a day.
“Chaos started,” she said. “No other word for it … and it’s just getting crazier.”
As of last week the township had received “hundreds of thousands of dollars” in 2018 prepayments, Leszczynski said, but no final figure was available this week.
Montclair’s tax situation is even more complex than other municipalities because the township is undergoing a revaluation that will likely change the tax rate and also change property assessments for many residents, Leszczynski said.
Her office has received calls from residents seeking advice about what they should do, and they were told it depends on an individual’s financial situation.
“We’re not accountants and we ‘re just in no position” to offer advice, Leszczynski said. “We can’t tell them if it’s in their best interest.”
In a press release last week announcing that the tax collector’s office would be open this past Saturday, Montclair Mayor Robert Jackson said: “The new federal tax bill was signed into legislation Dec. 22, leaving little time for property owners to meet the end-of-year deadline if they are considering prepaying 2018 taxes. Given the recent influx of queries to the township regarding 2018 property tax prepayment, we decided to provide additional time on a Saturday for those residents and business owners who wish to pay their 2018 taxes in advance.”
In August when the actual 2018 tax rate is determined the 2018 tax bill will be adjusted based on what property owners have prepaid, according to the press release.
Because of the revaluation — which will give Montclair a new assessment and tax rate — the township has a lot more variables to deal with in terms of local property taxes than other places, Leszczynski said.
Some residents just don’t have the financial wherewithal to prepay their 2018 bills to be able to deduct them, Erwin said.
“It puts a strain on a lot of people,” she said. ”Many people know they are going to have to take a hit on the [tax deductibility] limit because they can’t afford to pay.”
As for the end of the rush at her office this week, Leszczynski said: “It’s back to normal quiet. I’ll take it.”