Mired by problems in collecting earned income taxes in Luzerne and several other counties statewide, the Centax/Don Wilkinson tax collection agency is going out of business and has agreed to sell its contracts to its longtime rival, Berkheimer Associates of Bangor, Berkheimer officials confirmed Tuesday.
John DeRemer, vice president of Berkheimer, said the firm recently reached an agreement to take over most of Centax‚??s accounts, including its contract with the Luzerne County Tax Collection Committee, which oversees earned income tax collection for all municipalities and school districts in the county.
The development could mean an end to tax woes faced by numerous municipalities, which have not received all the taxes they‚??re due because of significant delays Centax experienced in distributing millions of dollars it collected, said Paul Keating, municipal administrator in Kingston and chairman of the county committee‚??s finance committee.
The committee, which meets tonight, is not obligated to accept Berkheimer, however, and could choose another competitor, such as Keystone Financial of Harrisburg, Keating said.
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.
Centax has come under fire for its failure to timely process and distribute the taxes. As of Tuesday approximately $12 million had not been disbursed to the 91 Luzerne County entities for which Centax collects, said Pam Heard, treasurer of the TCC and finance director for Nanticoke.
That‚??s forced several municipalities, including Nanticoke and Forty Fort, to take out tax anticipation loans to cover the shortfall.
Officials from Centax did not respond to emails Tuesday seeking comment.
Maggie Good, a consultant hired by Centax‚??s bonding company to try to resolve the issues, said Centax‚??s problems stemmed primarily from a lack of an adequate computer system.
‚??The state came out with a new processing method to collect the earned income tax. Some tax collection agencies were fully prepared to take that over and had systems in place. Unfortunately, Centax didn‚??t,‚?Ě Good said.
Centax has had similar problems in several other counties, including Armstrong, Carbon, Columbia, Elk, Schuylkill and Susquehanna. Each of those counties terminated their contract with the firm.
Good, president of Meridian Group of Pittsburgh, said she initially looked to implement changes that would allow Centax to resolve the Luzerne County issues, but determined that would be futile.
‚??After seeing how much work had to be done to dig Centax out of the hole, my recommendation was they enter into a partnership to see if any other tax agency could take over the contract,‚?Ě Good said. ‚??We reached an agreement with Berkheimer.‚?Ě
DeRemer said he‚??s confident Berkheimer will be able to quickly resolve problems and get municipalities the money they so direly need. The county committee is not obligated to accept Berkheimer, however, because its contract with Centax includes a clause that requires it to approve any assignment of the contract with another tax collection agency.
‚??We are not going to force anyone to stay in the contract. If they want to utilize another tax collector, we will let them out of that,‚?Ě he said.
Good and Keating said they are encouraging the committee to approve Berkheimer because they believe the firm is in the best position to resolve the problems quickly.
Keating said he‚??s not questioning if Keystone could handle the job. He believes Berkheimer is better positioned because it has already been working with Good and has internal knowledge that will speed up the process.
Keating said the Berkheimer contract also will save communities money because the firm has agreed to a 1.48 percent commission, compared to the 1.49 percent commission that was being paid to Centax. Keystone‚??s rate is 1.55 percent, he said.
‚??There are two essential elements we are facing: time and cash flow,‚?Ě Keating said. ‚??We have to focus on how we prioritize with the little time we have and start infusing cash into all communities as quickly as possible. I don‚??t know if anyone is in a better position than Berkheimer to do that right now.‚?Ě
The Luzerne County Tax Collection Committee will meet today at 6:30 p.m. at the Luzerne County Community College in the Education Conference Center, Nanticoke.
The Luzerne County Flood Protection Authority voted Tuesday to cancel the Don Wilkinson agency‚??s contract to collect the Wyoming Valley Levee fee.
Authority members cited concerns about the company‚??s performance.
The company came under fire earlier this year for failing to send out levee fee delinquency and pre-lien notices required by its contract.