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Pennsylvania municipalities want to stop receiver from destroying tax files

| Saturday, Dec. 29, 2012, 10:05 p.m.

Municipalities from across Pennsylvania want an Allegheny County judge to stop a court-appointed receiver from destroying records from a now-shuttered Bridgeville tax collection company.

“We need an accounting of what was collected and what was not collected” by Central Tax Bureau of Pennsylvania, said Linda Iams, director of finance for the Westmoreland County township of Penn. “I would take a guess that those records are very important to us, to make sure everybody has paid.”

The court-appointed receiver is asking to destroy documents including W-5 forms filed for tax credits, direct payment vouchers, documentation of payments received and final returns filed by taxpayers, some containing sensitive information such as Social Security and bank account numbers.

Some records are electronically stored, while others are mingled so that “it would be like trying to find a needle in a haystack to locate one individual municipality's records,” said Paul Cordaro, an attorney for Campbell & Levine LLC of Pittsburgh, which is overseeing the end to Centax's operations. He added that while some municipalities may need some records, the cost of maintaining them isn't worth the effort.

Allegheny County Judge Christine Ward set a Jan. 16 hearing on the record destruction request.

“I've spoken to a number of people who expressed concerns, and I think we have some potential resolutions,” Cordaro said, though he declined to say what steps might be taken. “I'm hopeful we will have a reasonable resolution to the issue.”

For decades, Centax collected taxes and fees for municipal governments. Act 32, which took effect last January, 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 taxes for all taxing districts in the county. The company then distributes taxes collected to the towns and school districts where taxpayers live.

Previously, each municipality and school district chose a collecting agent.

Centax had collected taxes for 12 counties, including Beaver, Armstrong, Greene, and Clarion, and for hundreds of municipalities and school districts.

Over the summer, school districts, townships and boroughs complained that Centax was woefully behind on processing and distributing earned income tax payments, and those delays affected their finances. The company blamed the delays on software problems and shut down Sept. 21.

H.A. Berkheimer of Allentown has taken over most collection duties. Jordan Tax Service and Keystone Collections Group have also taken over collections.

Cordaro said that he believed Centax at one point owed about $27 million to various agencies. He said he didn't know how much has been paid.

He added that the owners of some money sitting in old accounts that may never be identified.

In his court motion, Cordaro said Centax leased 10 offices and storage facilities throughout Pennsylvania, and he doesn't have the money to keep the offices open.

The motion seeks court approval to destroy tax collection, operation and corporate records of Centax and its sibling company, Don Wilkinson Agency, and records of municipalities and school districts.

“It's not a fun situation to be in,” Cordaro said. “I'd much rather be in a position to retain these records, but it's not economically possible to store them.”

Green Tree Manager David Montz said Friday that after talking to the receivers, he believed that old records the municipalities would not need would be destroyed.

In August, Montz said he believed Centax owed the borough at least $30,000 in earned income taxes from 2011 and more than $150,000 in local services taxes. On Friday, Montz said the borough has received most of the money.“We're pretty close to being made whole,” Montz said. “We're not there, but I'm pretty close.”

Les Mlakar, Penn's solicitor, said he's talked to other Westmoreland attorneys, and they're considering lawsuits either in Allegheny or Westmoreland county to preserve the records.

“I have a concern for Penn Township over the destruction of the records,” Mlakar said. “We need the records to have an audit.”

Trib Total Media writer Rich Gazarik contributed to this report. Bill Vidonic is a staff writer for Trib Total Media. He can be reached at 412-380-5621 or bvidonic@tribweb.com.

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