Mello-Roos Is Deductible Now
Hat tip to profhoff for sending this in, from the sfgate.com:
On the eve of tax-filing deadline, the Franchise Tax Board abandoned its campaign to get California property owners not to deduct a portion of their real estate taxes.
“We have removed material from our website that limits the deductibility of real property taxes to taxes imposed on an ad valorem basis,” the tax board said in a notice posted Friday on its website:
The news comes at a vexing time for taxpayers. Since the personal income tax filing deadline is Tuesday, taxpayers do not have much time to correct their returns if they followed the FTB’s advice and did not deduct school parcel taxes and eligible Mello-Roos assessments. “Amended returns should be filed if the originals already have been filed or cannot be corrected in time,” the California Taxpayers Association says in a report at www.caltax.org.
In December, the tax board wrote to the IRS asking it to clarify its position.
In a letter dated Feb. 6, an IRS associate chief counsel said the Internal Revenue code does not explicitly say real estate taxes must be ad valorem to be deductible. It says taxes that are not ad valorem could be deductible “if they are levied for the general public welfare by a proper taxing authority at a like rate on owners of all properties in the taxing authority’s jurisdiction, and if the assessments are not for local benefits (unless for maintenance or interest charges).”
Although the letter was dated Feb. 6 and posted on the IRS website in March, the tax board says it never received it.
“We saw it on April 5,” when a legislative analyst ran across it on Taxanalysts.com, a news service for tax professionals, says Denise Azimi, a spokeswoman for the tax board. Azimi confirms the letter was a response to the tax board, even though its name has been redacted.