Don’t plan on paying your 2018 property taxes early in Hall County — it’s illegal.
Tax offices in high-tax states are flush with residents rushing to prepay their 2018 tax bills before the new $10,000 deduction limit in the Republican tax reform bill takes effect.
The current deduction is unlimited, but taking the state and local tax deduction can rule out other deductions, making the exemption most valuable to people living in states with high income, property and sales taxes at the state and local level. Taxpayers have been able to deduct income or sales taxes, but not both.
In 2017, Georgia’s state government expected to collect $10.7 billion through its 6 percent personal income tax and $5.7 billion through its 4 percent sales tax.
Hall County’s 2018 property tax revenue is expected to be $47.9 million through a tax rate of 6.7 mills. The Hall County School District expects to collect $82.8 million in property tax through its rate of 18.5 mills.
Georgia taxes in general aren’t close to those in many states in the Northeast and on the West Coast, but that hasn’t stopped locals from peppering the Hall County Tax Commissioner Darla Eden’s office with questions about prepaying 2018 taxes.
The short answer is: You can’t.
“It’s more than an accounting issue. It’s actually against the law until you get the order from the (Georgia Department of Revenue),” Eden said. “We can be fined — I believe the county can be fined and I think I can personally as well as a constitutional officer.”
Each year, counties throughout Georgia collect tax information into a digest, which includes the total taxable value of all properties in a county. That document is approved by boards of commissioners and registered with the state.
Only after the state has approved that digest can counties accept tax payments. In Hall, tax payments can’t be made until late July.
Based on a Wednesday announcement from the Internal Revenue Service, that means Georgia residents can’t qualify for the unlimited local tax deduction with their 2018 taxes.
That hasn’t stopped people from trying. Eden’s office is fielding hundreds of calls from homeowners looking to pay their taxes early, and some people have even put checks in the mail.
“We got some payments in this week from people wanting to prepay,” she said. “We’re having to send those back with a nice letter explaining why we can’t accept their 2018 payment — because I have nothing to apply it to.”
Essentially, that 2018 tax bill doesn’t exist until the digest has been approved at the local and state level.
“It’s a legitimate request from taxpayers because of the $10,000 cap,” she said. “I get it, but until the tax is assessed we cannot accept a payment, and we can’t accept a payment until we get the order.”
Russell Hopkins, a certified public accountant with BatesCarter in Gainesville, said the change could affect a large number of Hall residents, but not a majority.
“With the new $10,000 combined state and local tax limit and an increase in the standard deduction to $24,000 most households in Hall County will get the same itemized deduction or the higher standard deduction,” Hopkins said. “However, that is not to say that the impact won’t be felt by plenty of households. City of Gainesville residents will notice it more so than Hall County residents because their property taxes are higher.”
It’s not just residents of Hall County wondering about what comes next for their tax bills. Tax commissioners throughout the state are facing questions from taxpayers about the 2018 changes.
“I think some financial advisers are recommending this to their clients due to the passage of the federal tax reform bill, which sets new limits on the deductions for local and state property taxes,” said Kevin Payne, president of the Georgia Association of Tax Officials, in an email to his membership on Friday. “We can’t accept property taxes unless we have an approved digest. Since none of us have approved 2018 digests, we can’t accept any ‘extra’ funds that count toward 2018. So our answer has to be no.”
Payne, who also serves as the tax commissioner for Floyd County, said accepting those extra funds “would be an auditing nightmare and would open a tax commissioner up to a tremendous amount of risk if those funds end up missing.”