News

May 26, 2009

Act 32 may be taxing situation

Law may reduce number of earned-income tax collectors statewide from 560 to 69.

The implementation of Act 32 in 2012 could change how Luzerne County residents pay their earned-income taxes – or it could have no effect at all. Either way, the decision will depend on the vote of a newly legislated committee, which itself is a major change in the tax-collecting process.

Act 32, which was signed into law in 2008 by Gov. Ed Rendell, consolidates the tax collection to a countywide basis, reducing the number of collectors statewide from 560 to 69. The law, designed to eliminate inefficiencies that cost tax beneficiaries as much as $237 million annually, affects just earned-income tax-collecting agencies -- such as Berkheimer Associates and the Don Wilkinson Agency – and doesn’t affect property-tax collectors, many of whom are municipality residents.

Though the state says the new system will alleviate inefficiencies, local officials have previously decried the law for eliminating local control over when and how taxes are collected. “You’re not going to get that individual attention you might get if you had that separate contract with the tax collector,” Michael Revitt, Wilkes-Barre Township’s manager, has said. “If you have an individual contract with them, you have some leverage over them.”

The law reorganizes taxation into “tax collection districts,” which are roughly countywide but grouped by school district. That way, municipalities are part of the TCD in which their school district is based, no matter if it’s in another county. For the Luzerne TCD, that means Nescopeck borough and township and Hollenback Township – which are part of Berwick Area – are out, while Noxen (part of Lake-Lehman) and Exeter (part of Wyoming Area) townships in Wyoming County, Beaver Meadows and Bank Township in Carbon County and McAdoo and Kline Township in Schuylkill County (all part of Hazleton Area) are in.

The law requires that representatives from each municipality and school district make up a “tax collection committee,” which will vote on the TCD’s bylaws and decide who gets to collect their taxes.

The representatives’ votes will be weighted, however, to articulate the uneven distribution of population and revenue within the TCD.

But don’t expect immediate changes – the state Department of Community and Economic Development has until Sept. 1 to assign the weights, and the committee has until Sept. 15 to announce when its first meeting will be.

With those initial votes, the committee can decide to keep the state’s initial process, or “do it their way,” said Fred Banuelos, who works at DCED’s Governor’s Center for Local Government Services. “A lot of it is just on the initial setup,” he said. “It’s mostly just for voting who your tax collecting officer will be.”

Though TCDs might include municipalities from other counties, the system is designed so the tax collectors will continue to collect under the same formula as previously, but the procedure might be different from one TCD to the next.

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