HILLSBOROUGH: Federal tax bill caused $10.5 million tax payment rush in December

The final days of 2017 were a busy time for the more than 500 municipal finance departments throughout the state. The combination of a newly passed federal tax reform bill and an executive order from Gov. Chris Christie resulted in nearly four days of confusion and worry among taxpayers.

Between Dec. 27 and Dec. 30, the Hillsborough Township Finance and Tax Department was beset by a constant barrage of phone calls and long lines of residents looking to pre-pay their 2018 property tax bills.

“There were four of us in this office and we honestly spent three and a half full days doing nothing but taking payments and answering questions,” Hillsborough Chief Financial Officer Nancy Costa said. “While you were on the phone answering a question, someone else would call and leave a message, so we were also spending time responding to a lot of voicemail messages.”

In December, the township’s financial department took in “just under $10,553,000 in 2018 tax payments” for 3,651 properties, Costa said. By comparison, the department took in “329 payments for just over $533,000” the previous year.

More than 13,000 residential properties exist in Hillsborough Township. Under the 2017 municipal budget, a home valued at $350,000 paid $8,452 in taxes.

The sudden push by residents stemmed from a desire to soften the blow of a $10,000 cap on the amount of state and local taxes – including property taxes – that a taxpayer can claim as an expense as a result of the GOP tax bill. Since that provision was slated to begin on Jan. 1, taxpayers everywhere had limited time to get their financial ducks in a row.

Almost immediately after the tax reform bill was signed into law by President Donald Trump on Dec. 22, Costa said a lot of the confusion for taxpayers stemmed from the definition of “assessed.” Residents wanted to know whether a property owner could pre-pay some or all of the 2018 property tax bill during 2017.

State law already allows property taxes to be paid in advance of the quarterly due dates of Feb. 1, May 1, Aug. 1 and Nov. 1. Christie’s executive order, signed on Dec. 27, reinforced that rule, directing towns to accept pre-payment of the 2017-2018 property tax bill if the payment was made before Dec. 31.

Given the fact that the Christmas holiday meant municipal offices were closed on the Monday and Tuesday before New Year’s Eve, Costa said there became a situation where residents wanted to get a lot done in a short amount of time.

“Normally that really isn’t a big deal in this office because four times a year we collect taxes, but the issue became that people needed more information than would in a normal tax collection quarter,” Costa said. “They were asking us to give them financial advice, which by law we’re not allowed to do.”

Though changes to federal tax regulations left residents confused, Costa said she and other CFOs throughout the state were aware of what was going on in Washington, since connections at the state level kept them abreast of what was happening in Congress.

“As a CFO and tax collector, my connections with the state kept us apprised at all times with an updated e-mail letting me know how the bill was progressing,” she said. “We were prepared for it, we just were not prepared for the multitude of questions.”