It took nearly a year, but dozens of Luzerne County municipalities and school districts that are owed more than $3.46 million in earned income tax money collected by the Centax-Don Wilkinson agency in 2012 should begin getting checks within the next week or so, according to an official with Berkheimer & Associates.
A final reconciliation of Centax’s accounts recently was completed, freeing Berkheimer to begin distributing the funds to 80 municipalities, which are owed a combined $1,961,319. In addition, 11 school districts are owed $1,504,608, said John Deremer, a vice president with Berkheimer.
Distributions to municipalities range from $598,943 to Wilkes-Barre to $530 to New Columbus. For school districts, distributions range from $640,708 to Hazleton Area to $18,385 to Northwest Area.
The money comes from earned income taxes collected by Centax for the first and second quarters of 2012. Money from the third and fourth quarters of that year was collected and distributed by Berkheimer, which took over Centax’s accounts after the firm ceased operations in August.
Centax had been hired by the county’s Tax Collection Committee to process earned income taxes countywide, but it ran into significant problems that left it unable to complete the task. That led to significant delays in distribution of the funds, causing major problems for many communities, some of which were forced to cut services and/or take out tax anticipation loans to cover the shortfall.
Hazleton City Administrator Steve Hahn said he’s pleased the city, which will get $157,847, will finally see the money, but he still questions why the situation that caused the problems developed in the first place.
Hahn had opposed Act 32, the legislation that required counties to take over collection of earned income taxes. These problems would not have occurred had individual communities been permitted to continue to use local tax collectors, he said.
“It seemed to me that there was a process in place that no one had any problems with,” Hahn said.
The problems with the new process “created a severe, severe hardship for all communities involved,” he said.
Hahn said Hazleton was not forced to take any drastic actions due to the delay in receiving the money, but it still hurt, noting $157,000 is 10 percent of the earned income taxes the city receives. “That’s a big amount of money to be without,” he said. “It’s money we certainly could have used last year.”
The distribution of the back earned income tax money is among several distributions that will be made from Centax’s accounts in the coming weeks and months. The receiver appointed to dissolve Centax recently filed a motion in Allegheny County Court seeking approval of a plan to distribute other leftover funds in the company’s accounts.
Those funds include $199,376 in earned income tax collected in 2012 that the receiver, the Campbell & Levine law firm, has not distributed yet because it could not determine which municipalities and school districts were owed the funds.
Paul Cordaro, an attorney with Campbell & Levine, has proposed turning over that money to various tax collection committees in the state. The tax collection committees would then attempt to determine which municipalities and school districts are owed the funds.
In his motion, Cordaro acknowledged the committees will face the same challenges as his firm did in identifying who is owed money. His firm will provide all the assistance it can, he said, but ultimately it will be up to the committees to decide how to resolve the issues.