Posted on

Senator Joe Pennacchio (R-26) : We told you that the IRS Wouldn’t Fall for Your SALT Workaround Scheme

the staff of the Ridgewood blog

Trenton NJ, In response to the news that the IRS has denied attempts by New Jersey and New York to circumvent the federal cap on SALT deductions, Senator Joe Pennacchio chastised Democrats for wasting taxpayer time and resources on a workaround that never had any chance of succeeding.

On Tuesday, the IRS issued final regulations prohibiting governments from doling out tax credits in exchange for charitable contributions – effectively negating the legislation advanced in the spring of 2018, despite the objections of legislators such as Senator Pennacchio, who warned that the IRS would take action.

Continue reading Senator Joe Pennacchio (R-26) : We told you that the IRS Wouldn’t Fall for Your SALT Workaround Scheme
Posted on

Assemblywomen sets the governor straight on property taxes, SALT deductions and irresponsible spending

Taxes-1

the staff of the Ridgewood blog

River Vale NJ, Assemblywomen Holly Schepisi sets the governor straight on property taxes, SALT deductions and irresponsible spending in the state of New Jersey .

Schepisi said on Facebook ,” I have a novel idea, why don’t we retain some of the top tax advisors, tax attorneys and CPAs in the country to rewrite NJ’s tax code to lessen our property tax burden while figuring out a better way to fund our schools and take advantage of the new federal tax code? We spend millions fighting Trump’s policies, why don’t we invest those monies into making our own tax situation a little more tolerable. Cut spending where we can, revise our property taxes and actually help our middle class.”

Continue reading Assemblywomen sets the governor straight on property taxes, SALT deductions and irresponsible spending
Posted on

With new SALT limit, IRS explains tax treatment of state and local tax refunds

Roadsaltimage

the staff of the Ridgewood blog from the IRS website

WASHINGTON DC, The Internal Revenue Service today clarified the tax treatment of state and local tax refunds arising from any year in which the new limit on the state and local tax (SALT) deduction is in effect.

In Revenue Ruling 2019-11 (PDF), posted today on IRS.gov, the IRS provided four examples illustrating how the long-standing tax benefit rule interacts with the new SALT limit to determine the portion of any state or local tax refund that must be included on the taxpayer’s federal income tax return. Today’s announcement does not affect state tax refunds received in 2018 for tax returns currently being filed.

Continue reading With new SALT limit, IRS explains tax treatment of state and local tax refunds
Posted on

Readers Point Out the Obvious About Ridgewood and New Jersey Taxes

Ridgewood_Real_estate_theridgewoodblog

file photo by Boyd Loving

“With the declining tax base, who is going to pay for all of these excessive salaries and benefits (platinum health care, very generous pension & unused sick leave payouts) negotiated in bad faith by the public sector unions ?”

“States with lower state & local taxes make much more sense for businesses to invest given the SALT deduction limits of $10,000 on their employees hurt them in high tax states like NJ.”

“The average residential property tax in Ridgewood is actually now $18,000 as of 2018/19 tax year… just as state & local tax deductions are limited to $10,000. What are the BOE and Village Council doing to help Ridgewood families keep food on their tables and gas in their cars given higher commuter pass costs, tolls, higher parking permit fees, higher Graydon and tennis pass fees, etc? And where are the vaunted schools & Village services those taxes are paying for ? In the tank.”

Posted on

Reader says municipal tax revenue levels are unsustainable

for sale Ridgewood_Real_Estate_theRodgewopodblog

file photo by Boyd Loving

Given SALT deductions are now limited to $10,000 for property taxes, shouldn’t the Council and BOE be aware that the vast majority of Ridgewood residents have seen an effective tax INCREASE and be looking for ways to reduce the burden? Realized sales values suggest home values will need to decline in the next assessment, so unless they jack up the mill rate, municipal tax revenue levels are unsustainable?

Posted on

NJGOP Chairman Calls On Murphy To End Frivolous Lawsuits Against Trump Admin and Focus on New Jersey

the staff of the Ridgewood blog

Trenton NJ,  Yesterday after the Trump administration moved to block state efforts to work around a new limit on state and local tax deductions, Governor Murphy has said he is weighing legal actions.. New Jersey’s top Republican NJGOP Chairman Doug Steinhardt released the following statement:

Continue reading NJGOP Chairman Calls On Murphy To End Frivolous Lawsuits Against Trump Admin and Focus on New Jersey

Posted on

Internal Revenue Service Says New Jersey’s SALT “Charitable Tax Dodge ” a No Go

IRS_logo

the staff of the Ridgewood blog

River Vale NJ,Assemblywomen Holly Schepisi , “Several months ago I raised concerns that the IRS would disallow NJ’s proposed charitable contribution of property taxes workaround. I implored my fellow legislators to stop pushing gimmicks and instead focus on much needed reforms to how we fund schools, reforms to our pension and health benefit programs, reestablishing caps on property taxes and working to change how we fund things in this State while reducing our expenses. ”

Continue reading Internal Revenue Service Says New Jersey’s SALT “Charitable Tax Dodge ” a No Go

Posted on

Pascrell Fails to Accept Responsibility for New Jersey’s Failed Fiscal Policies

Bill Pascrell

“Pascrell Lambasts Latest Republican Tax Outrage”

July 25,2018

the staff of the Ridgewood blog

WASHINGTON D.C. ,  Today, Representative Bill Pascrell, Jr. (D-NJ-09), the Ranking Member of the Ways and Means Subcommittee on Trade, hammered the release of the so-called second phase of the Republican tax plan which announced that the egregious cap placed on federal deductions for State and Local Tax Deductions (SALT) would be made permanent.

“As New Jersey’s Yogi Berra liked to say, it’s déjà vu all over again. Another day, another attempt by congressional Republicans to stick it to Garden State. Already burdened with the highest property taxes in America, for years people in my state relied on the state and local tax deduction to provide their families with flexibility to pay their bills. Republicans took care of that, capping those deductions to help pay for a trillion-dollar tax cut for big corporations and big tycoons. Now Republicans are announcing the SALT cap is going to be made permanent to bedevil New Jerseyans for all time. We already know Republicans go out of their way to bring pain on the people of the Northeast. They said so themselves. But they keep trying to prove it again to us. We’ve had it with this garbage. The GOP tax scam should be overturned and the full state and local tax deduction reinstated. Let the top 1% pay their fair share and leave New Jersey the hell alone.”

Pascrell, made no mentions of the 50 or so years of unabated irresponsible fiscal policies of the state New Jersey or the “Garden State ” as he like to say. Pascrell like many New Jersey politicians likes to blame the abject failure of state policies on the federal government .

Pascrell has represented his district since January 1997 and in that time there has been massive flight of people and businesses out of the “Garden State” for far greener pastures .  New Jersey ranks at the top only in taxes and ranks near the bottom is business climate and quality of life . Perhaps he and his fellow  New Jersey representatives could spend far more time on the problems in the state of New Jersey and less time grand standing and name calling .

 

Posted on

Murphy Administration :Joins Lawsuit claiming federal government violated constitution by imposing arbitrary limits on state and local taxes that residents can deduct

Internal_Revenue_Service_logo_CNA_US_Catholic_News_5_16_13

July 19,2018

the staff of the Ridgewood blog

Trenton NJ,  still dreaming, in what can only be described as a “hail mary” ,Attorney General Gurbir S. Grewal today joined three other states in suing the Trump Administration over its $10,000 cap on the federal tax deduction for state and local taxes (SALT).

Joining New Jersey in suing both the Internal Revenue Service and the Treasury Department were New York, Connecticut and Maryland. The lawsuit seeks to prevent the federal government from enforcing the SALT deduction cap, and to have the cap declared invalid.

Governor Phil Murphy welcomed the action.

“What the Trump Administration enacted with the SALT deduction cap was nothing more than a tax hike on our working and middle-class families and seniors,” said Governor Murphy. “I made a commitment to New Jerseyans to provide long-term property tax relief when I signed legislation to preserve deductibility by enabling municipalities to create charitable funds. We will continue to fight to protect local taxpayers and businesses and I applaud Attorney General Grewal and the states of New York, Connecticut and Maryland for their leadership and action in challenging the constitutionality of this assault on our states.”

“Today we are making good on our promise to fight for New Jersey taxpayers – by taking legal action to protect our residents and restore fairness to the tax code,” said Attorney General Grewal. “Simply put, the federal government violated the constitution when it imposed new, arbitrary limits on the amount of state and local taxes that residents could deduct on their federal tax returns.”

In 2017, the Federal Government adopted a significant change to the federal tax code. Previously, taxpayers who itemized their deductions could deduct from their federal tax liability all money paid for state and local income, property and sales taxes. Under the new code, however, the same taxpayers are only permitted to claim a comparatively small deduction of up to $10,000 for those taxes.

The lawsuit filed today notes that the so-called SALT deduction on individual federal tax liability has historically been recognized by Congress as essential under the Constitution. “A SALT deduction has been a part of every federal income tax law since the first federal income tax was enacted in 1861,” the complaint explains.

The lawsuit adds that the SALT deduction is necessary to prevent federal taxes from interfering with each state’s right to determine its taxation and fiscal policies, because federal taxes crowd the states out of traditional revenue sources like income, property and sales taxes.

The suit asserts that the federal government’s “drastic” decision to cap the SALT deduction at $10,000 will significantly increase the federal tax liability for residents of each of the plaintiff states, including New Jersey. Homeowners who could once deduct the full cost of their local property taxes now can only deduct a fraction of those taxes. That will increase the cost of owning a home, which in turn will depress home values.

To make matters worse, the states explain, the federal government went after these states deliberately. Treasury Secretary Steven Mnuchin even said, the point of the changes to the SALT deduction was to “send a message to the[se] state governments” that Washington wants them to change their spending policies. That effort to coerce states, the complaint notes, is another reason why the latest SALT changes are illegal.

Today’s joining of the federal lawsuit by Attorney General Grewal is the Attorney General’s latest action aimed at protecting New Jersey residents from oppressive new federal tax policies under the Trump Administration.

In May, Attorney General Grewal wrote the U.S. Internal Revenue Service (IRS) urging that it stop “playing politics” and drop its plan to enact a rule that would prevent New Jersey residents from claiming deductions for charitable contributions made to their local governments. Governor Phil Murphy had previously signed a law allowing residents to receive property tax credits for such charitable contributions.

Posted on

NJ Attorney General Asks IRS to Withdraw Proposal that Would Upend New Jersey’s Charitable Deduction Tax Credit Law

Roadsaltimage

AG Grewal to IRS: Stop “Playing Politics” with SALT Tax Guidance—or Face a Legal Challenge

May 27,2018

the staff of the Ridgewood blog

Trenton NJ,  Attorney General Gurbir S. Grewal today urged the U.S. Internal Revenue Service (IRS) to drop its “misguided” plan to enact a new rule designed to undermine a recent New Jersey law. That law – signed by Governor Phil Murphy earlier this month – allows residents to receive property tax credits when they make charitable contributions to their local governments.

The Trump Administration enacted a tax overhaul in December 2017 that placed, for the first time, a $10,000 cap on the federal deduction for state and local taxes (SALT). In response, New Jersey, New York and other states passed laws allowing residents to instead make deductible charitable contributions to their local governments, and to receive partial tax credits when they do so. “But in an unprecedented move,” Attorney General Grewal explained, the IRS just yesterday “announced plans to end the deductibility of such contributions.”

In a letter to IRS Commissioner David J. Kautter, Attorney General Grewal points out that the New Jersey tax credit law is similar to 100 laws enacted in more than 30 other states, and is consistent with longstanding IRS guidance and numerous court decisions that such contributions remain deductible. So “the IRS’s plan will upend over 100 state programs in a single rule—a nightmare for both states and the IRS.” Yet the IRS has given “no reason for [its] sudden about-face.”

“The IRS should not play politics. Instead, it must confirm its longstanding interpretation of federal law,” Grewal explains in his letter. “Should the IRS and Treasury Department continue down this path, New Jersey will have no choice but to challenge the new rule in court.”

Attorney General Grewal’s letter notes that the New Jersey law authorizes municipal and county governments and local school districts to establish “charitable funds for specific purposes” and to permit residents to gain partial property tax credits for donating to those funds. Across the states with similar programs, charitable funds “run the gamut” from those designed to aid natural resource preservation efforts to funds that help provide financial aid for college-bound children, support shelters for the victims of domestic violence and many other programs.

The Attorney General contends that the IRS’s decision runs counter to the federal Tax Code, which makes plain that deductions are permissible for “any charitable contribution … payment of which is made within the taxable year.”
“The statute is explicit that such contributions include gifts given to state governments and their political subdivisions,” Grewal notes. “The only remaining issue is whether such gifts are deductible if the contributor gets a tax credit in return.” While the IRS has previously “answered that question resoundingly in favor of laws” like New Jersey’s, the latest guidance “suggests that the IRS plans to tell states and taxpayers alike the answer is no.”
“I ask you to think twice before going down that misguided road,” Grewal warns the IRS Commissioner. “The IRS’s longstanding approach, supported by precedent and policy, supports what New Jersey has done.”