Wednesday, April 16, 2014

Centax‚??s bonding firm may aid towns

February 16. 2013 6:15PM
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Municipalities that sustained financial harm due to the Centax/Don Wilkinson agency‚??s failure to timely distribute earned income taxes may be able to avoid litigation and obtain reimbursement from the firm‚??s bonding company, the solicitor for the Luzerne County Tax Collection Committee said Tuesday.

Attorney Jeff Malak said the TCC has already submitted a claim for $3.2 million with the bond company to obtain funds to pay municipalities and school districts that have not received the full amount of taxes they‚??re owed. Those entities also can seek to recover other damages, such as costs incurred if they had to take out a loan to cover the shortfalls, and lost interest on money they are yet to receive.

Several communities, including Nanticoke and Forty Fort, were forced to take out tax anticipation loans in order to meet bills due to significant delays Centax experienced in processing and distributing earned income taxes.

Pam Heard, finance director for Nanticoke and treasurer of the TCC, said she is collecting information from all municipalities and school districts regarding damages they incurred to submit to the bonding company.

Nanticoke had to obtain a $400,000 tax anticipation note after Centax failed to distribute several hundred thousand dollars to the city. Heard said she will seek reimbursement for approximately $8,000 in interest the city will incur on the loan. She also might seek reimbursement for interest the city lost on money it has not yet received.

‚??There is a lot of lost opportunity. The city can‚??t spend money it should have had,‚?Ě Heard said.

Forty Fort council members, who voted Tuesday to seek a $256,000 tax anticipation note, also vowed to seek reimbursement for costs associated with the loan.

Tim Henry, solicitor for Wilkes-Barre, said officials are still considering whether to take legal action against Centax should the city‚??s credit rating be negatively affected by the company‚??s failure to distribute $1.1 million the city is owed.

The Standard & Poors Rating Service recently notified the city it was considering downgrading its ‚??A‚?Ě credit rating based on cash-flow problems the city is experiencing.

‚??Obviously it would have an adverse effect if our credit rating suffered over this,‚?Ě Henry said. ‚??We certainly would be injured, and that would give us a cause of action.‚?Ě

Centax began collecting earned income taxes for all 91 municipalities and school districts in the county in January as part of changes in tax collection mandated by 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.

The company has encountered significant problems in processing payments it has received and recently reached an agreement with Berkheimer Associates to take over its accounts.

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