ALBANY – The Internal Revenue Service says the workarounds New York, New Jersey and Connecticut approved following the new federal cap on deductions for state and local taxes (SALT) aren’t acceptable to the federal government.
Taxpayers who itemize will only be eligible for a federal deduction that’s a small fraction of their charitable donations for property tax payments, according to proposed regulations issued by the Treasury Department on Thursday.
The charitable contribution strategies in high-tax states were created so taxpayers would be able to write off the full donation amount from their federal taxes.
NY Gov. Andrew Cuomo said the IRS was imposing politically motivated regulations to further the agenda of the Trump administration and block reforms from New York and other Democratic leaning states.
Cuomo said he and other states will consider litigation in an effort to fight the new regulations.
Below is Cuomo’s full statement on the issue:
“The federal government passed a partisan tax bill that took aim at New York, effectively raising our taxes and making us less competitive. The elimination of full state and local tax deductibility will cost New York families $14.3 billion each year, and we are already seeing evidence of its devastating toll on homeowners – home sales in Westchester for example fell by 18 percent in the second quarter, the most since 2011.
“Whether it be extreme weather or political attacks from the Trump administration — my number one job is to protect the people of New York. That’s why we were the first state to take action to protect our taxpayers against this federal tax assault and ensure New York families weren’t being used as a piggy bank to pay for tax cuts for big corporations.
“In a confounding and inexcusable act of betrayal, some New York Republicans voted for this anti-New York legislation, and every Republican in the New York delegation failed to stop their leadership from passing it. Representative John Faso went a step further by asking the IRS to effectively sabotage New York’s efforts to protect our taxpayers.
“Now the IRS is hastily proposing politically motivated regulations to further the agenda of the Trump administration and block reforms that deliver relief to New York taxpayers. In New York, we will not stand for this abuse of government power. We are confident that the recently enacted opportunities for charitable contributions to New York State and local governments are consistent with federal law and follow well-established precedent. And make no mistake: we will use every tool at our disposal, including litigation, to fight back.”
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