Executive order does not allow for early payment of 2018 school district taxes

On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act, which included several revisions to the Internal Revenue Code. The new law caps the allowable deduction for state and local income, sales and property taxes at $10,000, beginning in 2018.

Gov. Andrew Cuomo subsequently signed an Executive Order designed to help New York taxpayers pre-pay their 2018 property taxes before Dec. 31, 2017 in order to potentially claim the deduction before the new federal tax law goes into effect. The Order, and initial comments made by the Governor about it, have raised questions about whether school districts can accept early payments for taxes that will be levied during the 2018-2019 school year.

Mohonasen’s counsel has advised that while the governor’s Executive Order may, in some cases, allow residents to prepay their 2018 municipal (e.g., town, county or city) property taxes, there is no legal or practical mechanism for prepayment of school taxes by the Dec. 31 deadline. Most municipal property taxes are calculated on a calendar year, from Jan. 1 thru Dec. 31. As such, municipalities may be in a better position to issue tax warrants a few weeks early. However, Mohonasen Central School District operates on a July 1 to June 30 tax year, and has no mechanism to issue tax warrants in December for a budget that has yet to be finalized or put before voters in May.

The Executive Order does not provide the authority for school districts to adopt estimated or partial tax warrants for the 2018-2019 school year or to issue tax bills corresponding to those warrants. Further, the Order “does not address the prepayment of school taxes and does not change the statutory process by which taxes are levied by schools.”

Therefore, the Towns of Rotterdam, Guilderland and Colonie cannot accept pre-payment of 2018-2019 school taxes on behalf of the Mohonasen Central School District for federal tax purposes at this time. The district is required to follow its standard budgeting and tax levying process.  Mohonasen will adopt the 2018-19 proposed spending plan on April 16, a public budget vote will be held on May 15 and the tax levy will be adopted in late August of 2018.