Pittsburgh may hire private firm to collect tax debts
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Pittsburgh City Council today took a first vote toward outsourcing the job of collecting delinquent property taxes, after getting assurances that homeowners with tax problems will be able to enter into payment plans.
Councilman Patrick Dowd, who was initially skeptical of contracting with Jordan Tax Service and law firm Goehring, Rutter & Boehm, led the charge that led to unanimous passage.
"We are essentially handing a baseball bat to the tax collector and saying, 'Be more aggressive,'" he said. But he added that Mayor Luke Ravenstahl has agreed to invite all delinquent taxpayers to make good before the outsourcing takes effect on Jan. 1, and to preserve and enhance a system by which community groups can target debtors' properties for purchase and redevelopment.
The Pittsburgh Community Reinvestment Group, an umbrella organization of neighborhood groups, endorsed the arrangement and spoke for it at council's meeting. Unlike a 1990s sale of city tax liens, this deal would not give the collection firms the power to nix redevelopment efforts, said PCRG official Aggie Brose.
Jordan handles delinquent tax collection for Allegheny County, and is starting to pursue old bills owed to the Pittsburgh Water and Sewer Authority. It would add city and Pittsburgh Public Schools property tax delinquencies to its efforts.
Under the deal with the city, Jordan can tack 10 percent on amounts owed to the city, including the interest and costs. It can also provide two-year installment plans for homeowners, 18-month plans for landlords and one-year plans for owners of vacant, commercial or industrial properties.
The firm intends to ask taxpayers for evidence of hardship -- tax returns or medical bills, for instance -- before agreeing to put them into payment plans.
If Goehring, Rutter & Boehm takes legal action to collect a debt, it can charge the taxpayer fees starting with $450 for filing a complaint, and potentially continuing to $700 for taking a property to sheriff's sale.
The city only pays the firms if it specifically asks them to take an action against a delinquent taxpayer.
If the arrangement gets final approval next week, the firms would start collecting old taxes in January.
Mr. Ravenstahl strongly endorsed the plan in a morning press release claiming it would lead to "one low monthly payment" for a range of delinquencies.
First Published October 14, 2009 12:28 pm