Derelict tax collector Centax to close in six weeks
An embattled Bridgeville tax collection company that owes millions in earned income taxes to hundreds of school districts, townships and boroughs announced on Friday that it will shut down in the next six weeks.
Central Tax Bureau of Pennsylvania reached an agreement on Thursday with H.A. Berkheimer of Allentown to hand over the collection and distribution of taxes from workers' paychecks. Berkheimer also is to assume control of hundreds of other municipal contracts for collection of local service taxes, per capita taxes, real estate and mercantile taxes, business privilege taxes and amusement taxes.
“We understand how big of a problem is involved, and we will do what we can to rectify the situation and get cash flowing back to the municipalities,” said John DeRemer, vice president of Berkheimer, a 60-year-old company with 300 to 400 employees. “We've done this for a very long time. If we didn't think we could do this, we wouldn't have entered into the agreement.”
No one answered the phone at Centax's Bridgeville office on Friday afternoon. Owner Don E. Wilkinson II could not be reached. There are no allegations the money is missing, only that there have been significant delays in distributing it.
Municipalities and school districts said they were considering whether to take out loans or freeze or cut services while they await long-overdue payments from Centax.
Green Tree officials told residents on Friday to pay late earned income taxes directly to the borough instead of to Centax.
The borough sued the agency this week. Other agencies across the state have done the same, fired Centax or threatened to do so if it did not catch up on back payments. Twenty municipalities and school boards in Delaware County sued Centax in the past month, saying Centax owed them millions of dollars in earned income taxes, according to The Delaware County Daily Times.
“We're pleased to know that a competent collector has agreed to take over this immense burden,” said Janet Burkardt, an attorney for the Beaver County Tax Collection Committee, which represents 68 municipalities and school districts. ”It's a sad day for (Centax) with the number of years it's served public entities as a collector — and served so faithfully.”
Margaret M. Good, president of The Meridian Group, Downtown, which is acting as a consultant during the transition, said agencies that had earned income tax contracts with Centax are not legally obligated to sign with Berkheimer, but she's recommending that they do.
“If everyone went with Berkheimer, it would be much easier for us,” Good said. “It will lower the chaos we're going to go through.”
She believes “the majority” of the thousands of smaller contracts covering collection of the other taxes can be assigned to Berkheimer, but attorneys are examining that question.
For decades, Centax collected taxes and fees for municipal governments. The state Legislature passed Act 32, which took effect in January and streamlined the collection and distribution of earned income taxes. Under the law, tax districts or committees in each county hired a company to collect the tax.
The company then distributed those taxes to the towns and school districts in which those workers live.
Until recently, Centax collected taxes for 12 counties. Seven of them have switched or will switch to Berkheimer, DeRemer said. Others are deciding. Greene County switched to Keystone Collections Group in Irwin.
Robert Villella, president and chief reorganization officer at Centax, an 85-year-old company that employs about 125 people, previously blamed the delays on computer vendors he would not name. On July 27, Villella said he would announce a plan to catch up on the delays within a few days, but he has not.
Traveler's Insurance, which insures Centax, did not return a message seeking comment.
Green Tree sued the company on Wednesday in Allegheny County Common Pleas Court, asking a judge to appoint someone to run it. Manager David Montz said the company owes the borough at least $30,000 in earned income taxes from 2011 and more than $150,000 in local service taxes.
“Obviously, it affects our bottom line,” Montz said. “Our understanding has been that the money is there, but the problem is getting the money from (Centax) to us.”
Montz said Green Tree Council, not Meridian or Centax, will decide who collects taxes for the borough. He expressed frustration that no one has given municipalities many details about the agreement with Berkheimer.
“It's too secretive, and there's too many tax dollars out there,” Montz said.
Mary Abbott, tax office manager for Mt. Lebanon and chair of the Southwest Allegheny County Tax Collection Committee, said Centax owed the town more than $1 million in earned income taxes.
“It is so sad on so many levels,” Abbott said. “There are so many people who are hurting.”
The state Department of Community and Economic Development, which has overseen implementation of Act 32, said on Friday that it was “on the forefront” of solving Centax's problems.
“We've held conference calls with Centax and communicated with the affected tax collection agencies,” deputy press secretary Theresa Elliott said in a statement. “We have also met with and briefed House and Senate committee staff and several legislators on recent developments.”
Bill Vidonic is a staff writer for Trib Total Media. He can be reached at 412-380-5621 or firstname.lastname@example.org.