Suffolk County Executive Steve Bellone today announced he will sign legislation to establish the first county-sponsored charitable gift reserve fund in the State of New York. The County resolution complies with a provision in New York State law that allows taxpayers to make a voluntary charitable contribution to a charitable gift reserve fund. The new fund is a signature component of the County Executive’s SALT Cap Response Plan, a comprehensive plan to protect homeowners who will be negatively impacted by the new federal tax law that unfairly repeals their state and local tax deductions.
“I am committed to exhausting all available tools at our disposal to provide tax relief for our residents who are now feeling the impact of Washington’s massive tax increase,” said County Executive Bellone. “While we continue to push for Congress to restore these vital tax deductions, Suffolk County will not wait for Washington to act.”
“Since the sweeping Federal tax changes occurred last year that capped the SALT deduction to $10,000, many New York residents have felt the squeeze this tax season. I have heard from many middle class residents in my district who saw up to a $5,000 swing in their tax liability, leading many to write big checks to the Federal government that they never had to before,” said Rob Calarco, Deputy Presiding Officer. “While the SALT deduction reduction is still in place, the burden is now on local governments to create new ways to help our taxpayers ease their significant burden. The Charitable Fund will give local residents some relief until our representatives in Washington right this wrong. We are also committed to fighting any action by the IRS that attempts to eliminate these deductions.”
“The Federal government’s cap on the State and Local Tax deduction penalizes communities that value safe neighborhoods and strong public schools,” said the Suffolk County Legislature’s Majority Leader Kara Hahn. “Changes to the tax code that have limited these long-standing deductions throw salt into the wounds of working Long Islanders who believe that our region’s quality of life, great schools and safe streets are worth the investment.”
“We owe it to the taxpayers to try every avenue to recover the billions of dollars lost to the new tax plan,” said Legislator Bill Lindsay. “Creative new solutions are needed to help Suffolk County residents salvage their refunds.”
“I stand with the County Executive in his creation of a charitable gift reserve fund for the residents of Suffolk County,” said Legislator Susan A. Berland. “Charitable gift reserve funds have already been established in other jurisdictions. The limitation on the SALT deductions has hurt numerous residents in Suffolk County and we have an obligation to do all we can to mitigate this damage.”
Pursuant to the federal Tax Cuts and Jobs Act of 2017, the federal law resulted in a disproportionate impact on the tax system and economy of the State of New York, and in particular, Suffolk County. As a result, deductions for state and local taxes, including sales, income and property taxes, are now limited. The combined amount claimed for these taxes may not exceed $10,000, or $5,000 for married taxpayers filing separately. Prior to the new federal tax law, SALT deductions were not capped.
In response, Governor Cuomo and the New York State Legislature in 2018 enacted a series of bipartisan reforms to the New York State tax code designed to protect New York residents from the adverse impacts of the new federal tax law. One provision authorized local governments and school districts to establish charitable gift reserve funds and offer real property tax credits to incentivize contributions.
On Tuesday, April 9, the Suffolk County Legislature passed the County Executive’s resolution with support from 10 Democratic Legislators. Members of the Republican Caucus voted to abstain or were absent.
Eligible residents are now entitled to make a monetary contribution to the county charitable gift fund. Once the Fund Administrator verifies the contribution, he or she will present the resident with an acknowledgement form and a tax credit claim form worth 95 percent of the contribution. These forms can be presented to the residents’ respective Town Tax Receiver as payment towards the residents’ property tax bill. Under existing federal tax law, contributions to the County Fund can be claimed as a charitable contribution on an individual tax return.
Last year, the County Executive helped form a suburban coalition with neighboring municipalities to contest recently published draft IRS regulations that hamper New York’s efforts to restore deductibility for homeowners. The County Executive also traveled to Washington, DC to speak out against the draft IRS regulations at a public hearing. The IRS has yet to finalize these regulations. However, if necessary, County Executive Bellone, in partnership with the municipal coalition, is prepared to pursue legal action against the IRS.
A recent audit conducted by the U.S. Treasury Inspector General for Tax Administration found that nearly 11 million Americans would have lost a combined $323 billion in deductions if the new federal SALT tax law would have been in place for 2017. On Long Island, the impact of SALT is even more acute. According to the Urban-Brookings Tax Policy Center in Washington, a total of nearly 530,000 homeowners, or more than one in three tax filers in Nassau and Suffolk Counties, are affected by the SALT cap.
New York State already sends more taxpayer dollars to Washington than it receives in return. The New York State Comptroller estimates that New York sent $24 billion more in tax payments to Washington than it got back in federal spending last fiscal year. This has resulted in Washington imposing a massive tax increase on New York and Long Island in order to help fund tax cuts for people residing in other states that New Yorkers already subsidize.
Kevin Law, President and Chief Executive Officer of the Long Island Association, said: “The cap on the deductions for state and local taxes on federal tax returns inequitably impacts our region and weakens the real estate market, and thus we commend County Executive Bellone for his efforts to mitigate the negative impacts from the new tax law and protect our economy.”
John Cameron, Chairman of the Long Island Regional Planning Council, said: “As determined by LI2035, the Planning Council’s 25-year Sustainability Plan, one of the greatest impediments to Long Island’s future sustainability is its high property tax burden. That problem has been exacerbated by the federal government’s capping of the State and Local Tax (“SALT”) deduction. The Council salutes County Executive Bellone’s efforts to address that cap and reduce its significant impact on the County’s homeowners. The Council encourages all our elected officials to work together to ensure that the heavy burden of federal taxes is not inequitably placed on high cost of living areas such as Long Island.”
Mitchell H. Pally, Chief Executive Officer of Long Island Builders Institute, said: “The Long Island Builders Institute strongly supports all of these initiatives of County Executive Bellone to try and mitigate the negative effects of the limitation of SALT deduction. The Long Island housing market is too important to our regional economy to allow it to be left to decline without a major effort and the County Executive is leading the charge.”
Kyle Strober, Executive Director, Association for a Better Long Island, said: "As a region, we can remain idle and hope the loss of SALT will have little impact on our economy or we can proactively seek to mitigate the crippling economic effects on Long Island. County Executive Bellone's SALT action plan seeks to put Suffolk County on the offense against the incoming attack from the federal government.”