Facebook Twitter LinkedIn Google Plus RSS

Murphy, IRS face off over SALT work-around

By ,
Gov. Phil Murphy at the May 3 State and Local Tax Deduction bill signing.
Gov. Phil Murphy at the May 3 State and Local Tax Deduction bill signing. - ()

Gov. Phil Murphy has vowed to fight a threatened IRS move to thwart New Jersey efforts to allow residents to circumvent a $10,000 cap on state and local property tax deductions.

Murphy said Wednesday that he’s confident the SALT work-around “can and should be embraced by the IRS” and added that “anything less is a flat-out admittance that politics rather than policy guides the decisions of the Trump administration.”

The governor’s statement followed the IRS’ issuing a memo warning taxpayers not to follow laws like those recently signed into law by Murphy earlier this month, which would provide tax credits for charitable contributions to local governments.

“Despite these state efforts to circumvent the new statutory limitation on state and local tax deductions, taxpayers should be mindful that federal law controls the proper characterization of payments for federal income tax purposes,” the IRS warned.

The notice added that IRS regulations would be unveiled in the near future to make clear “the relationship between the federal charitable deduction and the new statutory limitation on the deduction for state and local tax payments.”

The federal $10,000 SALT cap deduction was part of a tax policy overhaul under the Tax Cuts and Jobs Act signed into law by President Trump in December.

 

 

More From This Industry

Daniel J. Munoz

Daniel J. Munoz


Daniel Munoz covers politics and state government for NJBIZ. You can contact him at dmunoz@njbiz.com.

Leave a Comment

test

Please note: All comments will be reviewed and may take up to 24 hours to appear on the site.

Post Comment
View Comment Policy

Comments

nick scalera May 25, 2018 9:38 am

What always fails to get mentioned in these articles is that taxpayers can only deduct charitable deductions (of any kind) if they itemize deductions (which are scheduled to double to $24,000 for married filing jointly couples in 2018). Therefore, many (most?) New Jersey residents will not be able to to take advantage of this change if and when it is approved by the IRS. It would be helpful if the authors would provide an indication of exactly how many residents would actually benefit from this gambit.

close