Posted on 05/24/2018 6:44:07 AM PDT by reaganaut1
WASHINGTON — The Internal Revenue Service is preparing to crack down on states that try to circumvent a new limit on the state and local tax deduction, saying on Wednesday that it will not allow local governments to find creative ways to help individuals fully deduct those taxes.
The I.R.S. warning comes in response to states, like New York, that have looked for ways to blunt the impact of a new $10,000 cap on the state and local tax deduction, known as SALT. The cap, which was included in last year’s $1.5 trillion Republican tax overhaul, hit predominantly Democratic, high-tax states hardest since it limits the amount of state and local sales, income and property taxes that residents can deduct from their federal taxes.
That has prompted a scramble among local lawmakers to find ways to allow constituents who owe more than $10,000 to continue to fully deduct those taxes and avoid a tax increase.
The I.R.S. said it would not tolerate states that try to flout the law — a stance that is likely to be challenged in court.
“Despite these state efforts to circumvent the new statutory limitation on state and local tax deductions, taxpayers should be mindful that federal law controls the proper characterization of payments for federal income tax purposes,” the I.R.S. wrote in a notice released on Wednesday.
The I.R.S. notice, which is a precursor to a formal guidance that will need to go through a review process, drew swift condemnation from state lawmakers.
“New York was the first to take action to protect our residents from this hostile assault and ensure New York families weren’t being used as a piggy bank to pay for tax cuts for big corporations,” Gov. Andrew M. Cuomo of New York, a Democrat, said.
(Excerpt) Read more at nytimes.com ...
That's a laugh, New York has people running to the border to leave, and Cuomo keeps raising taxes. Nothing will change until the state is bankrupt and Cuomo comes begging for a bailout.
Which will never happen because Democrats are addicted to higher taxes.
Wake me up should they actually begin to slash taxes.
Pretty much. My CPA gnome noted this will not stand, sadly no comes the 9th Circus....
One should be able to add the property taxes to the basis for the property.
LOL! High state taxes is not a "hostile assault?"
So if every retail establishment in the State of New York started calling their business transactions "charitable contributions," does this mean that NY taxpayers can claim deductions for their fuel, clothing and grocery costs on their New York Stat tax returns?
1. As far as I know, the cost basis of the property only comes into play when you're calculating the capital cost for tax purposes. A primary residence is exempt from capital gains taxes for most taxpayers anyway.
2. If you own a home as a rental property, then there is no need to add the property taxes to the cost basis of the property because you are still able to fully deduct the property taxes even above the $10,000 cap for personal residences.
So the scam where Democrats set up very high local/state taxes and then pass those costs on to the Fed by allowing full deductablity from the Fed tax return is over.
No wonder Blue state politicians are crapping their pants. Their voters are finally going to have to start paying “their fair share”.
9th circus isn’t the end of the line. The SC will be and there is no way they can make this case outside a tame extreme Leftist judge.
he4y the states flaunt immigration laws with sanctuary cities and states why not taxes? until someone goes to jail the states will keep up this crap
Hey Fredo...sometimes you play the system...sometimes the system plays you! Suck it up, d-bag!
So if I tell NYS Bureau of taxation and finance that my daughter’s tuition payment of 30K a year is a charitable contribution they’ll be down with that? And any parent paying college or private or parochial school tuition gets the same treatment.I am sure Mario’s brat will be okay with that.
Awesome. We may have finally found a way to tax Progressivism out of existence.
“So the scam where Democrats set up very high local/state taxes and then pass those costs on to the Fed by allowing full deductablity from the Fed tax return is over.
No wonder Blue state politicians are crapping their pants. Their voters are finally going to have to start paying “their fair share”.
Our CPA delayed/requested an extension for filing our taxes as he was overwhelmed by his elite clients pushing their deductions to the maximum for the 2017 tax year.
Even hiring extra people to help, he barely overcame the extra paper load as his elite clients submitted everything deduction they could find for the last year as he called it on the gravy train re these taxes.
He cited the VDH oped that only a few of us in California, less than 40%, are paying state/municipal taxes. So, the rest of us will get hammered in future years as more tax payers leave California. My wife had some expensive dental work coming, and he told us to delay the work until this year for our California deductions for our 2018 Ca. Taxes.
Last, but not least he advised my wife, I, and other clients eligible for reverse mortgages to do it and take advantage of the large Federal standard % deduction from 2018 on.
We did.
You wish! And so do I!.
But the devil never sleeps, and the Left never quits.
This provision of Trump’s tax law is the entire reason Nancy Pelosi is on such a jihad against it. It’s a major threat to her socialist paradise.
Governor Cuomo and Governor Moonbeam and all the other Leftists should be happy. “the rich” will pay their “fair share” under the new tax code. They can hardly complain about increased taxes on “the rich”. Beautiful.
Oh and they’ll lose any court challenge. There’s nothing unconstitutional about capping the deduction for state taxes.
If it’s charitable, then it’s voluntary. If you have to pay, or they put a lock on your front door and kick you out, and shoot you to death if you resist, then it’s a f*cking tax.
So it’s a tax. The cooomo’s and the mallow’s, and other insane democrats know that, and are deliberately misleading the public by playing the game of telling them that it will be considered a donation.
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