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homeowners' tax deductions

October 22, 2019 - 2:16pm

Press release:

The IRS issued new rules that would undermine a critical tax deduction on which New York homeowners rely. This prompted U.S. Senator Charles Schemer to move forward with an effort to restore New York State’s ability to work-around the part of the federal tax law that takes an unfair aim at the state by eliminating a homeowners’ SALT tax deduction.

(SALT stands for State And Local Taxes.)

Loss of the SALT tax deduction will cost New York homeowners tens-of-thousands of dollars.

For example, in Genesee County in 2016, the average SALT deduction amounted to $9,800 and about 6,700 local homeowners took advantage of it, according to statistics compiled by the National Association of Counties.

Schumer says that just as New York State was tying the bow on its work-around plan by passing a law that circumvented the feds, the IRS swooped in and used regulations to squash everything, adding insult to injury for local homeowners.

Therefore, Schumer today (Oct. 22) announced that he will use the Congressional Review Act (CRA) tool to force a vote on the Senate floor this week, on a resolution to nullify recent IRS rules blocking critical state workarounds to harmful state and local tax (SALT) deduction caps, and that restores New York’s ability to work around the harmful caps, allowing homeowners to again fully retain their SALT deduction.

While the IRS blocked New York’s work-around for families, the Treasury Department in September 2018 issued guidance that allowed businesses to continue to benefit from these same work-arounds. Reversing the IRS’s harmful rule will also preserve the ability of states to maintain their own local charitable deductions for education, childcare and nonprofits serving children, rural hospitals, environmental conservation, and more.

“As if the Trump-Republican tax bill — which has spiked tax payments for countless New York homeowners by eliminating the SALT deduction—wasn’t already bad enough, these new IRS rules add insult to injury. They are rubbing salt in the New York homeowners’ SALT-inflicted wounds,” Schumer said.

“Taking away the SALT deduction was brutally unfair to Upstate homeowners and hit ‘em right between the eyes and that’s why later this week, I plan to take control of the Senate floor and force a vote to nullify the IRS’s horrible rule and put power back in the hands of Upstate New York homeowners to soften the blow of the elimination of SALT deductions.

"New York’s hard-working homeowners shouldn’t be forced to bear the burden of the political games that target and punish specific regions of the nation.”

Schumer explained that he can use the special legislative power, provided for under the Congressional Review Act, in an attempt to nullify the recent IRS decision that blocks New York State from working around the provision in the federal tax law that strips New York homeowners from claiming their full SALT tax deduction.

The disapproval resolution under the CRA gives Congress the power to expeditiously review any new federal regulation, like the recent IRS decision that hurts Upstate New York, so long as the CRA disapproval resolution is filed within 60 legislative days of the regulation being finalized. Schumer said the use of the CRA power is comparable to declaring a policy emergency, and when it comes to the SALT deduction in New York State, the issue is serious.

The CRA legislative review is not held to the 60-vote requirement to pass the Senate, Schumer added, making it an attractive plan in this anti-New York era. Schumer reiterated just how serious the SALT issue is across Upstate New York, pointing out county-by-county the average SALT deduction taken by homeowners.

Under the pre-Trump tax code, taxpayers who itemized deductions on their federal income tax returns could deduct state and local real estate and personal property taxes, as well as either income taxes or general sales taxes.

State and local income and real estate taxes had made up approximately sixty percent of local and state tax deductions while sales tax and personal property taxes made up the remainder. According to the Tax Policy Center, approximately one-third of tax filers had itemized deductions on their federal income tax returns.

Schumer has traveled from one corner of the state to the other to push back against the capping of SALT deductions. In 2018, Schumer urged the IRS to grant New Yorkers who paid their 2018 taxes early the ability to apply those taxes to their 2017 SALT deduction, even if their property taxes were not assessed.

As the administration was seeking to pass its tax plan, which capped New Yorkers' SALT deductions, Schumer campaigned against the destructive legislation...calling on the New York Congressional Delegation to reject the misguided plan.

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