Six school districts suing Centax
Six area school districts on Monday filed lawsuits against the City of Altoona and two bonding companies in a renewed effort to collect almost $400,000 in earned income tax they said they are owed by the Central Tax Bureau of Pennsylvania Inc., known as Centax.
Attorney M. Janet Burkardt of the Ira Weiss law firm in Pittsburgh explained that while the City of Altoona is named in the lawsuits, she does not believe the city will be the focus of the effort to collect the money.
The city is named because it contracted with Centax, a Bridgeville company, to collect earned income tax for the city and the districts.
This occurred on Nov. 14, 2007.
The Centax operation was then covered by two bonding firms, Fidelity and Deposit Co. of Owings Mills, Md., and Travelers Casualty and Surety Co. of America, Hartford, Conn.
To get to the bonding agents, as Burkardt explained, the districts must go through the city.
Asked if Altoona could end up having to pay the districts, she said, “This is something I don’t think the city would be on the hook for.”
Centax is no more.
The company went out of business more than a year ago, having been placed in receivership in Allegheny County.
The firm allegedly owed tax money it collected for various governmental agencies throughout Pennsylvania.
Burkardt said that while Centax no longer exists, the responsibility, according to the lawsuits, falls on the bonding companies.
Two months ago, the initial lawsuits brought against Centax by the school districts were placed on hold by Blair County Judge Timothy M. Sullivan, pending the filing of a fresh set of lawsuits against the city and the bonding firms.
Attorneys for the districts, Burkardt and James P. McGraw of the Weiss law firm, filed the lawsuits just after noon Monday in the office of the Blair County Prothonotary and Clerk of Courts.
The lawsuits contend the following school districts are owed money:
— Spring Cove School District, $50,430.
— Bellwood Antis School District, $118,695.
— Altoona Area School District, $54,827.
— Hollidaysburg Area School District, $123,119.
— Penn Cambria School District, $25,229.
— Claysburg-Kimmel School District, $11,954.
According to the lawsuits, the school district and the city under state law are permitted to levy a tax on earned income.
In late 2007, Altoona contracted with Centax to become the agent to collect the tax from Altoona residents and residents who work in the city but reside in school districts outside the city.
According to the plan, employers were required to withhold the tax and then send it to Centax.
Centax remitted the money to the city on behalf of city residents.
The money collected from non-city residents was to be sent to their respective school districts.
Audits by the districts indicated more money should have been sent to the districts by Centax, and the focus of the lawsuit by the districts is to obtain the full amount they are owed.
The lawsuits cover the years of 2006-2011, with each district seeking funds for different years.
Mirror Staff Writer Phil Ray is at 946-7468.