Hundreds of property owners waited in line Wednesday at the Montgomery County treasury in Rockville to prepay their taxes, one day after the County Council passed emergency legislation letting them do so.
Several people waiting in line said they hoped that by prepaying their 2018 bill now, they can take a larger deduction on their 2017 property taxes before a new federal tax-cut bill that Republicans passed last week caps state and local deductions at $10,000.
“If the IRS rules prepayment is deductible, I can avoid the $10,000 limit,” Olney resident Bill Davis said while he stood in line.
Davis said his local and state tax payments are much more than $10,000 and he hopes to enjoy the full deduction one last time before the new tax bill limits it. He estimated that by prepaying, he’ll save a couple of thousand dollars—if the deduction is permitted.
He was one of more than three dozen people standing in a line that wrapped around the lobby at the treasury offices.
The line inside the lobby near the county’s treasury office Wednesday. Credit: Andrew Metcalf
Michael Coveyou, the chief of the treasury division, said that on average, there was a 45-minute wait before taxpayers could file their prepayments with the treasury.
He said county officials don’t know if the IRS will let taxpayers deduct the prepayments.
“I don’t know if anyone knows for sure if they’re deductible,” Coveyou said. “We’re not allowed to give any tax advice at all and, honestly, we don’t know if their taxes are deductible or not.”
The council on Tuesday passed a bill that immediately lets the county accept prepayments.
Just last week, a majority of the council members indicated they would not pass the bill because of the confusion it might create and its unknown impact on the county budget, as well as concerns it would only help wealthy residents.
However, several council members initially opposed to the idea later changed their minds after a number of residents contacted them to say it could help them save money on their tax bills.
Other area jurisdictions accepting prepayments this week include Washington, D.C., Howard County and Fairfax County.
Prepaying property taxes has also become popular across the country over the past week as residents in high-tax states seek to take advantage of the uncapped state and local tax deduction (SALT) before it’s limited. New York Magazine reported there were long lines to submit prepayments in other states such as New Jersey, New York and California.
Council member Roger Berliner, who led the effort to allow prepayments in Montgomery County, said Tuesday that about 40 percent of county residents itemize their taxes to take advantage of the local and state tax deduction.
Coveyou said that around noon Wednesday, about 150 people had filed property tax prepayment checks in person at the treasury.
He said the office expects to begin receiving prepayments in the mail on Thursday. The county noted on its website that it prefers the payments be mailed. Residents planning to prepay 2018 property taxes must submit a payment in person before the end of the year or send a check postmarked before Jan. 1.
“Everybody’s been very cordial,” Coveyou said. “We’ve had a 40- to 45-minute wait since 8 o’clock this morning. There were 30 people here at 7:30 this morning, a half hour before we even opened up.”
Coveyou was in the lobby, fielding questions from residents and helping them make sure they had the necessary paperwork. He said the only time he’s seen the office this busy is for an hour or two on Sept. 30 each year, when at least partial payment of taxes is due.
Michael Coveyou, right, fields questions from taxpayers about prepayments. Credit: Andrew Metcalf
The county is asking taxpayers who prepay bring a signed Notice of Intent with them. That form is available on the county’s website.
Taxpayers also need to bring a check in the amount of their 2017 property tax payment to prepay. Coveyou recommended that people also have a copy of their tax bill because it saves staff members a minute or two processing the prepayment.
He said the treasury will deposit the prepayments in a general fund for prepaid taxes that will be invested for approximately the next six months.
Davis said that before he arrived at the treasury, he called his escrow company, which automatically takes out taxes as part of his mortgage payments, to make it aware that he was prepaying his 2018 property tax.
He said the company was fine with making sure he didn’t pay the tax twice, as long as he provides a receipt from the county showing that he prepaid, which he planned on obtaining at the treasury.
The county plans to issue a refund to any taxpayer who overpaid by prepaying their property taxes or a bill to those who underpaid.
Montgomery County has also created an information sheet about prepaying 2018 property taxes.