Montgomery County Tax Collection Threatens Municipal Budgets

Norristown, PA—Nov. 13, 2012—Montgomery County officials are putting pressure on municipalities and school districts to make a decision by year’s end regarding the collection of delinquent property taxes.  Last month, the County presented municipalities and school boards with an ultimatum: utilize the Montgomery County Tax Claim Bureau (TCB) exclusively to collect unpaid real estate taxes in 2013 and pay no commission, or opt out of the TCB in favor of a third party collector, like Portnoff Law Associates, and pay a five percent commission to the county although no collection services are rendered.

Not only does this proposal limit the options for cash-strapped municipalities, but it raises several concerns:

Legality

Under current Pennsylvania law, all county Tax Claim Bureaus are governed by the Real Estate Tax Sale Law (RETSL), which establishes specific fees and timelines related to the collection process. Third-party collectors are governed by the Municipal Claims and Tax Lien Act (MCTLA), which gives municipalities and school boards more control over the timing and charges incurred in the collection process. Montgomery County officials are implementing a new program, charging the delinquent taxpayer the higher fees permitted under MCTLA and promising scheduled sales for non-payment of taxes within a year. There is no mention of any exception for hardship situations. It is likely that this program will be challenged in court and in turn, make participating municipalities vulnerable to costly litigation.

Citizen Impact

Portnoff Law Associates is a third party collector which currently works with several Montgomery County municipalities and school districts to collect delinquent property taxes. Historically, Portnoff has received an average of 6,500 delinquent accounts each year from its partner school districts and municipalities in Montgomery County. Despite the large number of delinquent accounts turned over to Portnoff, in 2011, 86 tax claim files were listed for tax sale and three were sold.  Payment plans are customized to balance the needs of the municipality and the individual taxpayer. Montgomery County’s proposal gives no indication that individualized plans, even for the needy, will be offered. This will increase the number of homes listed for tax sale exponentially. 

Economic Impact   

Montgomery County’s ultimatum poses direct competition to Portnoff Law Associates, a family-run small business with clients throughout the state. Its main office is located in Norristown and employs 85 local people. At a time when job creation should be of paramount importance to our elected officials, the county’s proposal makes business conditions in Montgomery County far less favorable for Portnoff’s employees. 

If successful in implementing this large-government model, Montgomery County officials will sever proven public-private partnerships between Portnoff and its municipal clients. Private collectors are subject to all consumer protection requirements and may be terminated for poor performance. Montgomery County’s experimental tax collection model effectively eliminates the checks and balances that promote the best interests of municipalities and their citizens.