photo courtesy of the Village of Ridgewood
the staff of the Ridgewood blog
photo courtesy of the Village of Ridgewood
the staff of the Ridgewood blog
file photo courtesy of Boyd Loving
the staff of the Ridgewood blog
Ridgewood NJ, the United States Supreme Court rejected New Jersey and other states’ requests to restore the full income tax deduction for state and local taxes (SALT) .
Continue reading The US Supreme Court Refuses to hear the SALT Deduction Challenge
the staff of the Ridgewood blog
SOUTH ORANGE NJ, Governor Phil Murphy and Attorney General Gurbir S. Grewal embark once again on a fool’s errand,. In a press release Wednesday and claiming ,”Acting to protect state taxpayers from the Trump Administration’s repeated efforts to unfairly target them, Governor Phil Murphy and Attorney General Gurbir S. Grewal today announced that New Jersey has filed a federal lawsuit against the Internal Revenue Service (IRS) and the U.S. Treasury Department.
Filed in the U.S. District Court for the Southern District of New York, the lawsuit seeks to strike down a new IRS rule that would prevent New Jersey residents from obtaining a full federal charitable deduction whenever they contribute to local governments and other qualifying institutions and receive tax credits in return.”
Continue reading NJ Governor and Attorney General Launch another Ludacris Lawsuit Against the IRSthe staff of the Ridgewood blog
Allamuchy NJ , Senator Steven Oroho said that a regulation proposed by the Internal Revenue Service that would derail an attempt to sidestep the recently enacted $10,000 cap on the federal deduction for state and local taxes highlights the need to advance major reforms to lower the cost of government in New Jersey.
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.
January 8,2017
the staff of the Ridgewood blog
Ridgewood NJ, could New Jersey pull off the transfer of SALT deductions into Charitable Contributions ? We guess it depends on how you define Charitable Contributions.
So we referred to IRS Publication 526 Cat. No. 15050A Charitable Contributions, https://www.irs.gov/pub/irs-pdf/p526.pdf
The IRS defines Charitable Contributions :
Types of Qualified Organizations Generally, only the following types of organizations can be qualified organizations. 1. A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Certain organizations that foster national or international amateur sports competition also qualify.
2. War veterans’ organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico).
3. Domestic fraternal societies, orders, and associations operating under the lodge system. (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.)
4. Certain nonprofit cemetery companies or corporations. (Your contribution to this type of organization isn’t deductible if it can be used for the care of a specific lot or mausoleum crypt.)
Examples of Charitable Contributions—A Quick Check Use the following lists for a quick check of whether you can deduct a contribution. See the rest of this publication for more information and additional rules and limits that may apply. Deductible As Charitable Contributions Not Deductible As Charitable Contributions Money or property you give to: Money or property you give to: Churches, synagogues, temples, mosques, and other religious organizations Federal, state, and local governments, if your contribution is solely for public purposes (for example, a gift to reduce the public debt or maintain a public park) Nonprofit schools and hospitals The Salvation Army, American Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts of America, Girl Scouts of America, Boys and Girls Clubs of America, etc. War veterans’ groups
Expenses paid for a student living with you, sponsored by a qualified organization
Out of pocket expenses when you serve a qualified organization as a volunteer Civic leagues, social and sports clubs, labor unions, and chambers of commerce Foreign organizations (except certain Canadian, Israeli, and Mexican charities) Groups that are run for personal profit Groups whose purpose is to lobby for law changes Homeowners’ associations Individuals Political groups or candidates for public office
Cost of raffle, bingo, or lottery tickets
Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups
Tuition
Value of your time or services
Value of blood given to a blood bank Table 1.
Page 2 of 22 Fileid: … tions/P526/2016/A/XML/Cycle04/source 9:03 19Jan2017 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Page 2 Publication 526 (2016)
This is where is gets interesting:
5. The United States or any state, the District of Columbia, a U.S. possession (including Puerto Rico), a political subdivision of a state or U.S. possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. (Your contribution to this type of organization is deductible only if it is to be used solely for public purposes.)
Example 1. You contribute cash to your city’s police department to be used as a reward for information about a crime. The city police department is a qualified organization, and your contribution is for a public purpose. You can deduct your contribution.
Example 2. You make a voluntary contribution to the social security trust fund, not earmarked for a specific account. Because the trust fund is part of the U.S. government, you contributed to a qualified organization. You can deduct your contribution. Examples. The following list gives some examples of qualified organizations. Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations. Most nonprofit charitable organizations such as the American Red Cross and the United Way. Most nonprofit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. However, if your contribution is a substitute for tuition or other enrollment fee, it isn’t deductible as a charitable contribution, as explained later under Contributions You Can’t Deduct. Nonprofit hospitals and medical research organizations. Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs. Nonprofit volunteer fire companies. Nonprofit organizations that develop and maintain public parks and recreation facilities. Civil defense organizations.
https://www.irs.gov/pub/irs-pdf/p526.pdf