$6M in Centax payouts planned

| Saturday, May 18, 2013, 9:00 p.m.

Nearly $6 million will be sent to municipalities and school districts beginning this week as attorneys bring to a close the saga of a now-defunct agency that collected local taxes in 10 counties, but fell behind in turning the money over to the taxing districts.

Destruction of thousands of tax documents kept in storage should begin soon, said Paul Cordaro of Downtown-based Campbell & Levine LLC, which is overseeing the closure of Central Tax Bureau of Pennsylvania, or Centax.

According to court documents, more than $23.5 million sat in bank accounts as of October for Centax-related collections and for collections by Centax spinoff Don Wilkinson Agency Inc., which also ceased to operate. The exact amount collected and owed to local taxing bodies may never be known because of the sheer volume and the disorganization of the records, Cordaro said.

“I disbursed as much as I could,” Cordaro said. “Based on the information we had, if I knew where the money was supposed to go, I disbursed that money.”

Cordaro's firm will send out about 800 checks this week, totaling from $5.8 million and $5.9 million, in earned-income tax collections, which constitutes the bulk of the money that remains.

Some taxing bodies have said they have been paid what they were owed, Cordaro said. Those still owed money may have to go through their bonding agencies to make up the difference, he said.

“We're grateful the taxing bodies came out of this in relatively decent shape,” said attorney Ira Weiss of Pittsburgh, whose law firm represents the Beaver County Tax Collection Committee and other municipalities in central Pennsylvania. “This is one that has a reasonably good ending.”

Cordaro stood Friday in a cavernous storage room in George Moving and Storage in New Sewickley, Beaver County, where tax documents fill more than 6,000 boxes wrapped in plastic.

The records include W-5 forms filed for tax credits, direct payment vouchers, documentation of payments received and final returns filed by taxpayers. The records include information such as Social Security and bank account numbers and will be destroyed, Cordaro said.

Allegheny County Court Judge Christine A. Ward gave taxing bodies until the end of May to search through the records if they wanted.

Only a “handful” did so while they were at Centax offices, Cordaro said. No one asked to see the records once they were moved to storage. Some records available in electronic form went to the taxing bodies that wanted them.

Jeannette solicitor Scott Avolio said officials there have a third party going through electronic records to see how much money the borough may still be owed.

“We really don't have a solid answer,” Avolio said.

State law changed in 2012 so that a one agency is to collect the earned-income tax for all municipalities and school districts in a single county. Committees in 10 counties hired Bridgeville-based Centax to collect the taxes beginning Jan. 1 of that year.

Within several months, the committees said, Centax was millions of dollars behind in processing payments. In Greene County alone, officials persuaded a judge to stop Centax collections because it owed $500,000 there.

Centax blamed software problems and claimed that it would catch up, but by September, it closed its doors.

Weiss said that there was never any evidence Centax employees stole money, but simply fell woefully behind in processing payments.

Ward appointed Cordaro's law firm in November to oversee distribution of tax payments.

“Once it was in court, and handled in a businesslike way, treated like a business issue, (taxing bodies) were satisfied it was getting resolved,” Weiss said.

For taxpayers who may be owed refunds for 2011, paperwork has been turned over to H.A. Berkheimer of Allentown for processing, Cordaro said. Berkheimer picked up eight of the 10 tax committees.

Berkheimer has been issuing the refunds, said Vice President John DeRemer, and may take until July to finish.

“We were just able over the last couple of months to distill all the records down and process them and begin issuing refunds,” DeRemer said.

Another $800,000 in uncashed checks have gone to the state Treasury as unclaimed property, Cordaro said. Owners can eventually claim the money.

“I think this is as good as we could have gotten,” Cordaro said.

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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