Berkheimer Out as Tax Collector
Posted in the Quakertown Forum
#1 Aug 2, 2010
Berkheimer not concerned with loss
8/1/10 by Peter Hall - The Intelligencer
The loss of Bucks County's business is significant but not devastating for Berkheimer Associates, according to Jim Hunt, director of sales for the company.
The company, based in Bangor, Northampton County, will lose earned income tax collection contracts for 35 school districts and municipalities in Bucks County by the end of 2011 as the county's taxing authorities move to establish a single tax collection district.
Berkheimer collects taxes for 35 of the 48 municipalities and school districts in Bucks County that have an EIT. Palisades and Quakertown school districts and their constituent municipalities use their own tax collection bureaus.
The Bucks County Tax Collection Committee selected Keystone Collections Service of Irwin, Westmoreland County, to serve as the tax collection agency for all of the county school districts and municipalities that collect the EIT.
The 60-member committee's decision Thursday is the result of a 2008 state law designed to reduce the number of tax collection offices around the state from 569 to 69. Each county with the exception of Allegheny and Philadelphia will form a single tax collection district; Allegheny County will have four tax districts and Philadelphia does not collect the EIT.
The law, Act 32, is intended to stem a loss of tax revenue estimated in 2005 to be $237 million as a result of inconsistency and confusion among employers. When the law takes effect in January 2012, all Pennsylvania employers will be required to withhold earned income tax for employees.
The earned income tax is a levy on income including wages but not interest income or stock dividends. Schools and municipalities use the revenue for a variety of purposes.
Eileen Bradley, the Tax Collection Committee's treasurer, said the committee received proposals from six for-profit tax collection agencies. It narrowed the choice to Keystone and Berkheimer.
Bradley said after interviewing representatives at each company and touring their facilities, the committee chose Keystone because it appeared to be a modern and capable company. Keystone also proposed a lower commission on collections than Berkheimer.
Keystone's proposed commission is 1.39 percent of collections and no commission on delinquent taxes; Berkheimer proposed a 1.64 percent commission on collections and 1.57 percent on delinquent taxes, Bradley said.
The effect of the new commission will vary between school districts and municipalities, she said.
"Some districts will wind up paying more because their (current) rates are so favorable. Others will wind up with huge savings because they're paying more now," Bradley said.
Bradley said committee members were impressed with the Keystone's level of automation and use of technology. She said the company touted software it uses to ensure that taxpayers' money goes to the right municipality and school district.
Hunt said Berkheimer expects that as counties across Pennsylvania prepare to comply with Act 32, all tax collection agencies will lose old clients and gain new ones.
"Our overall thought is that there will be an exchange of areas, and although we've lost Bucks County, we expect to obtain other business," Hunt said.
Berkheimer administers taxes for more than 1,300 municipalities in Pennsylvania. The loss of EIT collections doesn't mean that Berkheimer is out of business in Bucks County. The company collects real estate taxes in Buckingham and the business privilege tax in a number of municipalities, Hunt said.
Tom Butts, director of community services for Keystone, said the company is enthusiastic about working with Bucks County schools and municipalities.
Keystone has been in business for 25 years and specifically focuses on tax collection in Pennsylvania. Butts said the company has been preparing for an increase in business as a result of Act 32 and is ready to scale its operation for whatever growth it sees.
#2 Aug 2, 2010
#3 Aug 2, 2010
This article refers only to the Earned Income Tax collections. Berkheimer remains the delinquent per capita tax collecter for QCSD.
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