Change of plans: The Montgomery County Council won’t be rushing to the rescue of homeowners shaken up by the GOP tax plan approved by Congress this week.
As the tax overhaul inched closer to passage Tuesday, council member Roger Berliner (D-Potomac-Bethesda) urged the county to help residents prepay their 2018 property taxes by the end of this year, an option that could allow them to deduct those taxes in full, before a new cap takes effect.
But in less than 48 hours, that plan caved in under the weight of a rushed timeline and administrative hassles, as well as the still-murky question of whether prepayment as a way of avoiding the cap is possible at all.
“We’ve been doing our best to evaluate the proposal and the implications, and generally speaking, we are finding that there’s so much uncertainty,” said Hans Riemer (D-At Large), the council’s president.
There was still hope for other D.C.-area residents worried about a big tax hit. Both in the District and Fairfax County — the most populous jurisdiction in the Washington region — officials said residents would be able to prepay, as long as they act quickly.
For Montgomery residents, however, no such luck. Both in an interview and in a memo sent to County Executive Isiah Leggett (D), Riemer outlined the hiccups behind Berliner’s prepayment proposal, which called on the council to retroactively pass legislation in January that would allow residents to prepay 2018 property taxes by the end of 2017.
To name a few problems: The county’s Finance Department would have had to create a manual system for handling the payments almost overnight, most likely leading to errors and confusion. Residents would have to be alerted to the option and given instructions about how to prepay over the holidays.
And with the council out of session until mid-January, lawmakers would have to decide on a proposal without public hearings or analyses of overall costs. (State law does allow Maryland counties to enact prepayment legislation, according to county officials.)
Officials said it is still unclear whether homeowners would be able to prepay and get deductions on property taxes in jurisdictions that haven’t yet sent out tax bills.
Brian Wynne, an accountant in Bethesda, said he had been advising clients that “if a tax has not yet been assessed, . . . by prepaying they may take your money, but it won’t create a deduction.”
The Republican tax overhaul caps deductions for state, local and property taxes at $10,000, affecting exactly the type of wealthy homeowners who make up a disproportionate share of residents of the District and its suburbs. Those homeowners would have needed significant cash on hand to pay their property taxes in the next 10 days. Multiple council members, including Berliner, said they could not determine how many Montgomery residents would have taken advantage of a prepayment option.
On Wednesday, District officials said residents may prepay their property taxes. Those payments can be paid electronically before midnight on Dec. 31, and D.C. branches of Wells Fargo will also accept checks or credit cards by the close of business Dec. 30, according to an advisory issued by the city.
Homeowners were warned not to mail payments, since they have to be received and recorded by the end of the year.
“Going forward, we plan to use every tool in our toolbox to protect Washingtonians from the negative impacts of this devastating legislation,” D.C. Mayor Muriel E. Bowser (D) said in the statement.
Fairfax County has allowed residents to prepay their property taxes for at least 10 years, said Scott Sizemore, director of the county tax department’s revenue division.
About 1,400 people a year usually opt to do so. But there was an increase in interest as it became more likely this month that Congress would pass a tax reform package, Sizemore said.
Since Dec. 11, he said, 143 homeowners have requested applications to prepay their property taxes, which can be done in monthly installments or several times a year.
“This morning, we had about 20 requests,” Sizemore said Thursday.
The county will process the applications through Dec. 31, but Sizemore said he can’t guarantee that anyone paying with a check after Tuesday will have their accounts credited in time. “If you want to do this, you can come in and pay, or you can do a wire or ACH transfer” through bank accounts, he said.
In Montgomery, Riemer and council member George L. Leventhal (D-At Large) said they would not have supported a retroactive bill presented to the council.
“We were going to have to tell everybody, ‘You’re going to have to talk to your tax adviser,’ ” Leventhal said. “It was problematic from the get-go.”
Lawmakers shared conflicting stories about how many Montgomery residents contacted them after news of Berliner’s plan spread. Leventhal said he had “been in touch with a lot of constituents about this,” while Riemer said he got only a few emails.
Berliner said the proposal left too many questions unanswered in too short a time frame, but added that he did not regret posing the option.
“When I first proposed this, I didn’t imagine there was going to be this level of complications, but sometimes that’s what happens,” he said.
Riemer said the council would have to look at how other facets of the Republican tax law will affect the county in the new year.
“But we ought to do that carefully and thoroughly,” he said. “Not before we have a chance to read the bill.”
Antonio Olivo contributed to this report.