By Staff     

Jun. 27, 2018: On Monday, June 25, the Village of Bronxville Board of Trustees held a public hearing to discuss Proposed Local Law 10-2018 "to authorize a charitable gifts reserve fund tax credit pursuant to real property tax law § 980-a."

The Federal Tax Cuts and Jobs Act, which was passed in 2017, capped deductions for state and local tax payments at $10,000 per year through 2025. In March of 2018, the New York State legislature passed its budget for fiscal year 2019, and this budget permits school districts and local governments to create charitable gift trust funds that give property owners a credit of up to 95 percent of contributions to these funds against local property taxes. The idea is that this will help taxpayers because charitable gifts are treated more favorably than state and local tax payments under the new federal tax code.

New Jersey, Connecticut, and Oregon have enacted similar laws. The Scarsdale Board of Trustees approved the establishment of a charitable gift reserve fund on June 12.  According to Scarsdale10583.com, the Scarsdale trustees didn't "necessarily endorse" this new policy but are offering it so that those who are willing to accept the "risks involved, may opt in." Others "may continue to pay taxes in the same manner as they always have.” Click on this link to read about the Scarsdale public hearing. The Town of Rye and the Village of Rye Brook have also both "approved legislation for the creation of a charitable gift reserve fund." Click here to read about what they have done. New York State published "Charitable Contributions to Local Governments and School Districts Guidance," dated May 16, 2018, which states that it is "designed to outline key aspects of the statute." Click here to read this document.

The public hearing in Bronxville on Monday was a forum for local residents and the board to discuss this issue to help determine if Bronxville should create a charitable gifts reserve fund for this purpose.

Following are the key issues that were discussed in the meeting.

• According to the Bronxville Village trustees, one of the big problems with a charitable gift reserve fund is that the village will have to certify that it is not being used to pay for "goods and services."

• Each taxing entity in Bronxville needs to decide if this is something it wants to do, and at this time, The Bronxville School, which represents a large percentage of the taxes, has elected not to do this.

• The IRS has not taken an official position on deductions that would be taken for contributions to charitable gift reserve funds, and taxpayers claiming deductions would be at risk of losing them and owing additional taxes, along with penalties and interest.

• It is unknown how this would work with escrow accounts.

• This would be a big administrative burden.

According to the village trustees, the Town of Eastchester is reviewing this as well.

At the end of the meeting, Deputy Mayor Bob Underhill, who presided over the meeting, said that he was "uncomfortable" with adopting the outlined local law and proposed that the trustees "postpone making a decision until we get more information."

Pictured here: Bronxville Village Hall.

Photo by A. Warner