SANATOGA PA – A 12-month wait-and-see approach is the path two local taxing entities – the Pottsgrove Board of School Directors and the Lower Pottsgrove Township Board of Commissioners – have separately decided to take in a Montgomery County battle over who will collect from, and get paid for pursuing, tax delinquents.
The commissioners and school directors both employ the same Norristown PA legal firm, Portnoff Law Associates Ltd., to collect from property owners who haven’t paid tax bills on time. Both say they’re satisfied with Portnoff’s work. Both have publicly expressed doubts the county can do as well or better in bringing in lost cash.
But waiting has a price. Both agree they may end up paying extra fees during 2013 to continue to have Portnoff, rather than a county-designated agency, collect back taxes. Their boards have independently concluded, however, those fees likely will be less than the extra money Portnoff brings in to them.
Earlier this month (November 2012), Lower Pottsgrove’s leadership gave itself a year to see if its hunch pans out. Pottsgrove’s school board did the same in October.
The matter becomes important to township and district taxpayers because both boards must now budget to spend money they weren’t required to pay before.
The cost to Lower Pottsgrove Township could amount to about $2,000 annually, Solicitor R. Kurtz Holloway told commissioners during their Nov. 1 meeting. The price to be paid by the school district, which charges far more than the township in property taxes, also is much higher. Business Manager David Nester told school directors during their Oct. 23 meeting the hit to the district may be $70,000 or more a year.
At issue is a long-standing state law that allows counties to receive a 5-percent fee on all delinquent taxes gathered for taxing entities within their borders, even if a county Tax Claim Bureau didn’t do the collection. Montgomery County Treasurer Jason Salus early this year began a campaign to enforce the law and reap its revenues.
Salus initially sought to impose the 5-percent premium on taxes collected over several previous years, as well as those in the future. The back-dated fees alone would have cost the school district about $350,000, Nester estimated. That proposal has since been dropped, but the county has pushed ahead on future delinquency fees.
The county named Northeast Revenue Service LLC, operating with a Wilkes Barre PA law firm, as its Tax Claim Bureau collection agent. It then gave taxing entities like the commissioners and school board until year’s end to designate a delinquent tax collector. Those that choose the bureau and Northeast Revenue pay no additional fees; those that choose other collectors pay the 5-percent premium.
The county’s problem, Lower Pottsgrove commissioners have repeatedly explained, is its poor record of collections in previous years. That’s what caused them during 2010 to select Portnoff as the township’s collection agent, and what motivates them to keep it, they said.
They’re not alone. In addition to the Pottsgrove school district, Pottstown Borough and the school districts of Pottstown, Boyertown and Perkiomen Valley are among taxing entities that have decided to stay with Portnoff.
Meanwhile, according to Holloway, legal challenges have already been filed against the county’s interpretation of how the state law can be implemented.