Carbon County officials are hoping their upcoming court hearing will help them reclaim delinquent taxes that were lost because Panther Valley School District utilized a third party tax collection agency instead of the county tax claim bureau.
During the county commissioners' meeting on Thursday, the board voted unanimously to add an addendum to a letter of understanding between the county and Riley and Company of Mount Pocono, from Aug. 21, 2009.
The action is for additional services to assist in assessing the overall accuracy of Portnoff Law Associates' information on delinquent tax collections. The revised total compensation will be $85,000.
The board also voted unanimously to have Infocon Corporation modify the current software to allow for the importing of unpaid tax claims to the tax claim bureau's current delinquent tax file and to comply with the Pennsylvania Real Estate Tax Sale Law requirements. The estimated cost will be $5,000.
Commissioner William O'Gurek, chairman, explained the actions are in preparation for the county's hearing against the Panther Valley School District for using Portnoff, of Norristown, to collect delinquent taxes instead of the county tax claim bureau. The hearing is set for Dec. 21 in front of Judge Steven Serfass.
The county is being represented by attorney Jane Maughan of Stroudsburg, the attorney who won a similar case in Monroe County, where the Commonwealth court ruled that delinquent tax collections need to go through the county tax claim bureau.
Panther Valley is being represented by Sweet, Stevens, Katz, and Williams LLP of Pittston, which they hired in December 2009.
O'Gurek explained that the county has a claim against a total of six taxing bodies Panther Valley, Weatherly, Jim Thorpe, and Hazleton school districts and the borough of Summit Hill for the practice of instructing tax collectors to turn over delinquent taxes to Portnoff instead of the county. All entities except Panther Valley School District ceased operation with Portnoff after the county notified them that there was a major issue, that is why the county filed a suit against Panther Valley last year.
"By turning over the delinquents to Portnoff, those taxing bodies destroyed the public records of taxes in Carbon County," he said. "The county code and state law says that the county's tax claim bureau is responsible to maintain these records."
O'Gurek said that Riley, who has been under contract with the county since August 2009, has reviewed 364,000 transactions from the taxing bodies that have turned over records to date.
"We have a nightmare to say the least on taxing delinquents," he said, "In order to prepare for court and prepare our claims that we will use in the future against the other taxing bodies, we needed the monies (and Riley's audit) that were involved."
The $90,000 that the county will spend to prepare the audit and update the Infocon system will also be part of the suit, O'Gurek said, adding that the county will seek to have that added expense paid by the school districts as "part of the costs associated with righting the wrong that had been done."
"It's a sad state of affairs but these taxing bodies turned over delinquent taxes to a law firm down the turnpike and took the records out of Carbon County that the law says should be in Carbon County," O'Gurek said. "There is $90,000 worth of costs associated with what they did, not to mention the monies that didn't come into the county because of what they did."
Carbon County is entitled to 5 percent commission on all delinquent taxes collected, according to state law, but the county has not seen the money from the taxes because they were not collected through the county tax bureau.
O'Gurek said, "That's part of the whole process because we now know how much was paid in on an annual basis. We're aware now of those monies the taxing bodies owe to the county, and that will be part of the case as well."
Commissioner Charles Getz noted the county is owed hundreds of thousands of dollars in compensation from the six entities because of the 5 percent commission.
O'Gurek said he feels the taxpayers are being held hostage because of the action by the taxing bodies and by the fees that Portnoff adds when collecting the delinquent taxes.
"The most unfair thing these taxing bodies did to the people who can ill afford to pay their taxes was turn it over to a vulture that slapped on an exorbitant fee and now it costs them a lot more money on what they cannot afford to pay to begin with," he said.
In addition to the fees, Portnoff convinced those taxing bodies that they should put liens on the delinquents' properties, which has only created more problems.
Commissioner Wayne Nothstein said that the elected officials are not the ones to blame in this situation because they were misled by Portnoff.
Getz agreed, adding that he feels the blame lies in the solicitors of these boards, because they allowed them to hire Portnoff.
O'Gurek said that the county will fight for the people and will pursue this matter until everything is resolved.
"They broke the law, resulting in no unified public records archive and we want to get it corrected," he said.
The county has been working to obtain the thousands of delinquent tax records since early 2009.
After discussions with Panther Valley failed to produce an agreement, the county filed suit against them in November 2009.
The court action against Panther Valley seeks to have delinquent tax records that were collected by Portnoff, the firm hired by the school district to pursue the collection of delinquent real estate taxes from 2000 to the present, returned to the county, so that the Carbon County Tax Claim Bureau can have complete records of all property liens and delinquencies.
It also seeks to obtain the 5 percent commission for each delinquent tax collection that the tax claim bureau is entitled to under the Pennsylvania Real Estate Tax Sale Law. According to the suit, that commission owed is at least $323,000 or more.
Panther Valley used Portnoff because the company promised to get the delinquent tax money faster than the county, and its services would be of no charge to the district. The added expense for their services would instead be added to the delinquent taxpayer's bill.