Battling IRS nix of tax ‘charity’ plan

ALBANY — New York, New Jersey and Connecticut are challenging the Trump administration’s decision to block a plan that would have allowed taxpayers to write off state and local taxes as charitable contributions.

Gov. Cuomo announced a lawsuit Wednesday filed by the three states against the Internal Revenue Service, which enacted rules recently that block states from passing laws to circumvent the cap on deductions for state and local taxes.

The governor, who has repeatedly railed against the cap on so-called SALT deductions as a weapon wielded against Democratic states, said the IRS rule “flies in the face of a century of federal tax law that says state choices to provide tax incentives for charitable donations do not affect the federal deductibility of those gifts.

“This is entirely unacceptable and, as I’ve said before, the IRS should not be used as a political weapon,” he added.

The cap on state and local deductions was capped at $10,000 as part of the 2017 Republican tax code overhaul, which led New York and other states to enact laws allowing homeowners to pay property taxes in the form of charitable contributions and use the federal charitable tax deduction to cover the rest.

New York, New Jersey and two other Democrat-led states filed a joint lawsuit last year arguing that the cap infringed on their constitutional rights. The Justice Department has repeatedly attempted to have the suit tossed out, arguing that the states haven’t suffered “concrete” and “imminent” harm from the cap.

A separate lawsuit was filed Wednesday by a coalition of local governments and school districts, led by the village of Scarsdale in Westchester County, challenging the IRS decision.

The complaint argues that the Trump administration’s regulations “usurp the lawmaking function and purport to unilaterally impose the current administration’s political will in violation of clear statutory limits.”

Both suits were filed in Manhattan Federal Court.

Assemblywoman Amy Paulin (D-Westchester), who helped pen the law allowing state and local taxes to be deducted as charitable contributions, said the ramifications of the ruling could be disastrous.

“In trying to satisfy the whims of this administration without running afoul of powerful interests, the IRS regulations strayed far from the law that they were supposed to interpret,” Paulin said. “These regulations will cause real harm for villages like Scarsdale and taxpayers across the country struggling to remain in the communities they fell in love with and to send their children to the same nurturing, highquality schools.”