In my colleague Ben Casselman's article this week on the Internal Revenue Service's side-eyed guidance for all of the people rushing to prepay property taxes, he quoted some words of warning from Andy Grewal, a professor of tax law at the University of Iowa.
Mr. Grewal said homeowners who usually paid their property taxes through an escrow account via their mortgage servicer could end up facing an audit if they prepaid at their local assessor's office this time. That's because the tax payments the individuals report to the I.R.S. on their tax forms could differ from what the banks would report on the separate forms they use when reporting mortgage activity to the government. Differing figures raise questions at the I.R.S.
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That got me wondering: Couldn't you just call your bank and ask it to update the figure it puts on its own forms? It turns out the answer may be no, but this issue is not simple or consistent among banks, either.
Mr. Grewal was right to worry about this issue, given the number of people with escrow accounts. According to the Mortgage Bankers Association, 79 percent of borrowers had escrow accounts in 2016 from which they paid property taxes on their primary mortgage.
But not all banks report property tax payments on the form they generate, Form 1098. Wells Fargo says it does report property tax payments on Line 10 of the form, which is simply labeled "Other." And no, alas, you cannot call the bank up and ask it to add whatever you are paying on your own to what was already sent from the escrow account this year. It will not adjust the figure.
Apparently, though, there is no legal requirement for a bank to report property taxes paid from an escrow account at all. Bank of America, Chase and Quicken Loans do not report it. Bank of America was fulfilling requests for additional property tax payments from people who already had property tax bills in hand, but it stopped doing so on Tuesday.
Also, here's an alert for a possible future headache: If you do prepay and have a mortgage and an escrow account, it may be a hassle (or impossible) to get the bank to adjust the original 2018 property tax payment schedule that it set on your behalf. You will want to let the bank know what you did and ask it to make whatever adjustments it can.
So people who want to prepay before Sunday but avoid trouble with the I.R.S. are faced with an interesting set of questions. If you're sure that your jurisdiction has officially assessed taxes that you can prepay and deduct this year but you have a mortgage with Wells Fargo, you will probably have no problem if the I.R.S. hassles you about differing amounts on different forms. But would the agency also then help itself to a look at other parts of your tax return? And have you toed the line on some of those other parts, or stepped over it?
People who have mortgages with Bank of America, Chase and Quicken Loans may feel they are in the clear because of a lack of conflicting tax forms, even if their local taxing authority has not been precise on whether prepayments fall in line with the guidance that the I.R.S. issued this week. But beware: If your property tax deduction is much higher in 2017 than it was in 2016 without your having changed residences, that could be its own flag for some line of audit-sniffing code that the I.R.S. has written or will write in the next few weeks.
As always in matters like these, it's best to consult tax professionals, even if they, too, lack a crystal ball or the skills necessary to read between the lines on I.R.S. guidance.