NANTICOKE ‚?? The Luzerne County Tax Collection Committee on Wednesday chose Berkheimer Associates of Bangor to replace the embattled Centax/The Don Wilkinson Agency as the earned income tax collection agency for all county municipalities and school districts.
Centax stored earned income tax receipts in a segregated account for Luzerne County, but encountered problems determining how much is owed to each of the 91 municipalities and school districts for which it collected those taxes, creating a budget crunch for many awaiting significant chunks of tax revenue.
Committee Treasurer/Secretary Pam Heard said municipalities are still owed about $12 million in total, though, she added, ‚??It‚??s just really hard to handle because we‚??re still not getting good information from Centax or their bonding company.‚?Ě
Centax began collecting the tax in January as part of changes in tax collection procedures mandated by state Act 32, which requires most of the state‚??s 67 counties to have one tax collector for earned income taxes. Previously, the tax was collected by tax collectors in each community.
Berkheimer officials confirmed Tuesday that Centax is going out of business and has agreed to sell its contracts to Berkheimer. The handling of undisbursed taxes from the first and second quarters of 2012 will be negotiated between the committee, Centax and its bonding company, Traveller‚??s Insurance, Berkheimer President Patty McNamara said.
‚??We‚??re more than willing to help out and take over the delinquent (disbursals),‚?Ě McNamara said.
The new agreement with Berkheimer will begin with the third financial quarter of 2012 and will last through Dec. 31, 2013. Finance Committee Chairman Paul Keating of Kingston at first suggested awarding the contract on a 60-day trial basis, but that suggestion was shouted down by municipal representatives eager to put the Centax debacle behind them.
The committee, which met at Luzerne County Community College, selected a proposal from the familiar Berkheimer, which handled earned income tax collection for more than half of Luzerne County municipalities and school districts in 2011, according to McNamara, over slightly more attractive terms offered by Keystone Collections Group of Irwin.
Berkheimer, the largest agency of its kind in the state, also collects earned income taxes for nearby Schuylkill, Carbon and Columbia counties. Agency Vice President John DeRemer said the company began hiring and training new employees more than a month ago.
The county also received a one-paragraph reply to its request for proposals from the Capital Tax Collection Bureau of Harrisburg, but representatives of the company did not attend Wednesday‚??s meeting.
Keystone promised to charge a slightly lower interest rate for its services of 1.45 percent plus postage to keep county tax receipts in a segregated account or 1.4 percent for a non-segregated account, versus Berkheimer‚??s rate of 1.48 percent plus postage for a non-segregated account.
Berkheimer did not offer a segregated option, but promised a ‚??virtual segregation‚?Ě would be maintained in its reporting process.
Keating encouraged committee members to consider the security offered by segregation.
‚??The segregated account allowed us through this entire process to know that our money was in a segregated account, it just wasn‚??t processed,‚?Ě he said. ‚??We knew that if we had $10 million in an account, our money was there. We just didn‚??t know where it was going.‚?Ě
Both companies said their processing systems would eliminate the confusion faced by Centax and they would not charge extra interest on delinquent accounts.
Berkheimer received 67 percent of the committee‚??s total vote, which is weighted to give schools a larger say than municipalities. Keystone received 27 percent, with the remainder of the panel absent or abstaining.
Drew Salko, Lake-Lehman School District‚??s delegate to the committee, was one of those voting for Keystone. He said the security of a segregated account and the slightly lower interest rate Keystone promised swayed his vote.
‚??I understand that they consider it virtually segregated, but nobody thought that Don Wilkinson/Centax would have this issue when they were applying, and look what happened,‚?Ě Salko said. ‚??At least our money was safe and protected.‚?Ě
Committee president and Wyoming Area School District delegate John Bolin said the one upshot of the Centax fiasco may have been increased participation at Wednesday‚??s meeting.
Representatives of 65 of the 91 Luzerne County municipalities and school districts attended, which Bolin said is more than twice the number typically attending committee meetings.
‚??Unfortunately, it‚??s bad times that bring everybody out,‚?Ě he said.
The Luzerne County Tax Collection Committee has instructed its solicitor, Jeffrey Malak, to draft a contract between the committee and Berkheimer Associates for the collection of earned income taxes effective through December 2013 before the committee‚??s next meeting. The committee is scheduled to meet Sept. 26 at 6:30 p.m. at the Luzerne County Community College Education Conference Center, 1333 S. Prospect St., Nanticoke.