Collectors in many Maine communities are seeing a wave of taxpayers show up to prepay their property tax bills before the new federal tax law takes effect Jan. 1.

For many, this is the last chance they’ll have to take advantage of the property tax deduction on their federal returns.

The tax reform bill signed into law Dec. 22 caps state and local tax deductions at $10,000 starting in 2018, which will primarily affect owners of high-end properties who pay large tax bills. In addition, the standard deductions for individuals and couples will double, to $12,000 and $24,000 respectively, so itemizing deductions will no longer make financial sense to many taxpayers even if their state and local tax totals fall under the cap.

“I’m knee-deep in phone calls,” Kennebunk finance director Joel Downs said Thursday as he fielded questions from residents who want to pay early.

In most towns, the second half of tax bills for the current fiscal year are not due until sometime from February to April, but many property owners are hustling to pay those bills before Dec. 31 so they can deduct the amount from their 2017 federal income taxes.

“People are just trying to take advantage of the current year’s tax law,” Downs said.

Tax collectors and clerks in Cape Elizabeth, York, Portland and Windham also were seeing an increase in property tax prepayments, and all attributed it to the new federal law.

“I don’t know if it will even make a difference or not,” said Ileen DaPonte, a North Deering resident who went to Portland City Hall on Thursday to pay off a $3,139.25 tax bill that isn’t due until March. “But I know I may not be able to itemize it in 2018, so we will itemize it this year and see.”

Property taxpayers across the country, especially those in regions with high property values and taxes, were flocking to local tax collectors to pay early, according to reports in The Washington Post and The New York Times.

Some taxpayers have also tried to prepay property taxes that haven’t been assessed yet, in hopes of being able to deduct them from this year’s federal tax bill. But the Internal Revenue Service announced Wednesday that those prepayments could be deducted only in limited circumstances, so it is uncertain whether those prepayments will qualify.

Debra Lane, deputy tax collector and town clerk for Cape Elizabeth, said one person asked to pay property taxes for the next five years, but the town cannot allow that. Lane said the town was only accepting payments for property taxes due through the first half of the next fiscal year, which would normally be paid next fall.

But after the IRS notice Wednesday, it’s unclear whether those prepayments will be deductible from 2017 taxes. Lane said town tax collectors advise people to check with their tax adviser, accountant or attorney before making any prepayments on taxes that have not yet been assessed.

She said her office was so busy with calls on the topic that other staff were diverted to handle the volume.

“We have received hundreds of phone calls, other work has had to be set aside, it is really unprecedented,” said Lane, who is also Cape’s assistant town manager. She said the town felt confident that those prepaying tax bills due this spring, which are based on current assessments, would be able to deduct them on their 2017 federal return.

Other towns, including Portland and York, were not accepting prepayments for taxes that have yet to be assessed. To do so would have required approval by the City Council or through a town meeting vote, respectively, officials said.

Downs, the Kennebunk finance director, said the town is going to return any prepayments of taxes that had yet to be assessed.

Stephen Gove, executive director of the Maine Municipal Association, said cities and towns across the state were seeking advice from his organization about prepayments and the new tax law.

“We have been getting calls about how to handle it and have been advising our members to inform individuals they should consult with their own tax adviser – either an accountant or an attorney,” Gove said.

Julie Sullivan, an assistant to the city manager in Portland, said that although it’s not unusual for people to pay their property taxes by the end of the year to apply the deduction to the current year’s taxes, more were doing so this year because of the new tax law.

“The huge increase in the standard deduction for 2018 has definitely been a factor cited by many customers when they’ve stopped in to make their payments prior to the 2017 tax year end,” Sullivan said in an email message.

Scott Thistle can be contacted at 713-6720 or at:

[email protected]

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