Pennsylvania Association of School Business Officials · PASBO Webcast Presentation 1. EIT TAX...

2009-2010 WORKSHOP SERIES

EIT TAX COLLECTOR SELECTION,

APPOINTMENT AND CONTRACT Act 32 charges the Tax Collection Committee (TCC) to appoint a county-wide tax collector by September 15, 2010. The PASBO Act 32 Task Force and Kegel, Kelin, Almy & Grimm LLP have been working on numerous technical assistance issues to comply with the requirements of Act 32. One deliverable is a sample TCC Tax Collector RFP for use by the Committee in the receipt of proposals from firms interested in providing tax collection services. This program will review the RFP in an easy to understand format that can easily be adapted by your TCC, and discuss factors to be considered in selecting and preparing an agreement with your tax collector. Learn about:

Sample tax collection services RFP and collection agreement Optimizing tax revenue/minimizing collection costs Tax collector bonding and audits Transition issues Tax collector fees and charges Allocation of tax collector fees and charges Delinquent tax collection Legal considerations and options

Date

November 19, 2009 - 9:00 to 11:45 AM Half-day Webcast to Desktop Moderator

Rick Vensel, PRSBA, Business Manager, South Middleton SDSpeakers

Clarence Kegel, Esq., Kegel Kelin Almy & Grimm, LLP, Lancaster, PA Jason Confair, Esq., Kegel Kelin Almy & Grimm, LLP, Lancaster, PA Announcements

All participants are asked to complete the Webcast Attendance Form at the back of your handout packet so

attendance can be recorded. Forms must be returned to PASBO by November 25 for CEU and CPE credit. If you are disconnected at any time during the program, please repeat the logon procedure to reconnect. You can submit a question at any time using the “Chat” function at the left side of your screen – type your question in

the message box and click on the arrow to send. Individuals requesting CPE credit will receive a certificate by mail. PASBO Professional Registration CEUs will be

uploaded to the PASBO website. To print a Course Transcript, go to http://www.pasbo.org/workshopseries.asp Your evaluation of this program is important to us. The primary contact will receive an evaluation form via email.

Please provide your feedback to ensure that PASBO programs are meeting your needs. This program is being recorded to provide information access to those not able to participate in the live program and

serve as a review tool. More information is available at the site where you downloaded handout materials. Your personal commitment to learning is rewarded through the “PASBO Best Customer Rewards Program.” Pay for

and attend PASBO workshops and earn credits that can be used to attend another program for free! For more information, see the Best Customer Rewards Sheet available in the Education/Workshop Series section at www.pasbo.org.

Thank you for your participation.

Pennsylvania Association of School Business Officials

Mailing Address: Office Location: P.O. Box 6993 2608 Market Place Harrisburg, PA 17112-0993 Harrisburg, PA 17110 Telephone 717-540-9551 www.pasbo.org FAX 717-540-1796

PASBO Webcast Presentation 1

http://www.pasbo.org/workshopseries.asp

http://www.pasbo.org/

EIT TAX COLLECTOR SELECTION APPOINTMENT

Pennsylvania Association of School Business Officials

SELECTION, APPOINTMENT AND CONTRACT

November 19, 20099:00 – 11:45 AM

Pennsylvania Association of School Business OfficialsDeveloping educational leaders in school operations.

(For the audio portion of the program, call in by phone (For the audio portion of the program, call in by phone using the numbers at the top of your screen.)using the numbers at the top of your screen.)

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PresentersModerator• Richard Vensel PRSBA Business ManagerRichard Vensel, PRSBA, Business Manager,

South Middleton SD, Boiling Springs, PASpeakers• Clarence C. Kegel Jr., Esq., Kegel Kelin

Almy & Grimm LLP, Lancaster, PA


• Jason T. Confair, Esq. Kegel Kelin Almy & Grimm LLP, Lancaster, PA

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Topics• Program Materials• Other Resources

• Background• One Tax Collection Agreement• RFP Timeline• Tax Collector RFP• Tax Collection Agreement• Tax Collector Weighted

Scoring Sheet• LST/Other Tax Collection

Pennsylvania Association of School Business OfficialsDeveloping educational leaders in school operations. 3

• Collection Cost Allocation• TCC Insurance• Shortening the Process

Assumption• You understand Act 32 basics

Program Goals• Provide understanding of:Provide understanding of:

Tax Collector selection processImportant factors in selecting collectorRecommended Tax Collection Agreement provisions (as embodied in PASBO Act 32 Sample Tax Collection Agreement)Related issues


• Provide RFP• Provide Scoring Sheet• Dialogue – questions and answers


Program MaterialsNow• KKAG PowerPoint• Tax Collector RFP• Tax Collector Weighted Scoring Sheet

Available from PASBO• Act 32 Sample Tax Collection Agreement

(with options and explanatory notes)• Regionalization of Earned Income Tax

C ll ti U d A t 32 f 2008 A D t il d


Collection Under Act 32 of 2008: A Detailed Legal Analysis (a technical assistance document prepared by Kegel Kelin Almy & Grimm LLP for the PASBO Act 32 Task Force) (April 2009)

Other Resources• PASBO Website – www.pasbo.org/act32resources.asp

Act 32 of 2008PASBO Act 32 EIT Collection PowerPoint – Act 32 of 2008: Restructuring the Collection of the Earned Income Tax forRestructuring the Collection of the Earned Income Tax for School Districts and MunicipalitiesPASBO Guidance: Act 32 TCC Implementation Packet

• Pennsylvania Department of Community and Economic Development Website

Search “Act 32”Frequently Asked QuestionsTCD MTCD MapsTCD ListsTCD Weighted Vote Guide

Search “Local Tax Register”Taxes imposed each SD/muniTax collectors

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Act 32 Background• 2006-07 EIT revenue per DCED

SD = $1.207 billionSD $1.207 billionMuni = $998 millionTotal = $2.205 billion (Phila. excluded)

• High $304 million = Allegheny County• Low $485 thousand = Pike Co.• Individual SD EIT revenue ranges $75 thousand


• Individual SD EIT revenue ranges $75 thousand to $30 million – muni numbers lower

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560 69Every county (except Phila. and

Allegheny) will select a single EIT collector

67 Counties (w/Phila.)

Allegheny County split – 4 collectors


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g y y p

Actual number collectors will be much less than 69!


2 Biggest TCC Issues/Documents

• Bylaws – including governance and management structure

• If third party vendor – Tax Collector RFP/Tax Collection Agreement

• Many other significant issues, but these 2 overshadow others


overshadow others

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2 Biggest TCC Issues/Documents• Other initial TCC steps addressed in prior

PASBO programs and in resources p gmentioned above

November 16 first meeting deadlineAppoint officers/notify DCEDAppoint legal counselTCC budget


TCC budgetTCC insuranceTCC Overall Timeline/action plan

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2 Basic TCC Types1. Some counties – current Tax Bureau serves all taxing

authorities and will be Tax Collector – already known• Likely dispense with RFP• But Act 32 still requires Tax Collection Agreement

(unless merge Tax Bureau and TCC – separate topic)• TCC retain Tax Bureau as Tax Collector per Tax Collection

Agreement• And TCC organization and other steps still required• See discussion below on Shortening the Process


2. Most counties – multiple Tax Collectors serve different taxing authorities – TCC will do RFP to select single Tax Collector

• TCC retains Tax Collector per Tax Collection Agreement

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Other Variations

• Same Tax Collector currently serves most, but not all taxing authorities within TCCnot all, taxing authorities within TCC

See discussion below on Shortening the Process

• Some TCCs might create, own, and operate a new Tax Bureau – but likely a longer term project



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Act 32 New Rules• Universal non-resident withholding – every employer must

withhold tax from every employee subject to EIT and remit to the Tax Collector for the employment place –eliminates current withholding loopholes – precludes direct payment to place of residence.

Note: non-resident vs. resident withholding (employer remits one place vs. multiple places)Philadelphia exception – not part of consolidation and uniformityDCED ill d dd Phil d l hi i i l ti


DCED will need address Philadelphia issues in regulations• Multi-site employer option – multi-site employers may elect

to file combined return for all counties and remit in only one Pennsylvania county (the Wal-Mart Amendment).

One Tax Collection Agreement

• Major change – one master Tax Collection Agreement between Tax Collector and TCCAgreement between Tax Collector and TCC –TCC enters contract for all taxing authorities

• Instead of prior individual Tax Collection Agreements between Tax Collector and each


taxing authority

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3-Legged Stool

• Tax Collector RFPTax Collector RFP• Weighted Scoring Sheet• Tax Collection Agreement

(the “TCA”)


Related PoliciesAttached to Tax Collection Agreement:• TCC Deposit and Investment Policyp y• TCC Tax Records Policy for Tax Collector

To be developed:• TCC Unidentified Tax Fund Policy• TCC Tax Collection Transition Plan


• TCC Tax Collection Transition Plan

• Other policies – future program

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RFP/TCA Underpinnings• Act 32 + many other statutes• Accounting and financial statement rules• Computer technology• Tax collection and enforcement process mechanics• What is important to school districts and

municipalities in the tax distribution and reporting process


• Investments, tax collector bonds, and insurance• Your TCC “tax facts” – current tax enactments, tax

collectors, etc.

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Your TCC Tax Facts

• Very important – first step is to collect/ summarize tax facts and documents relevantsummarize tax facts and documents relevant to TCC

• No “one size fits all”• Tailor TCC process and RFP/TCA to your

TCC tax facts



Applicable Statutes• LTEA/Act 32• Act 72 and other investment rules• Local Tax Collection Law• Municipal Tax Lien Law• Act 1 Real Estate Tax Shift Law• Act 24 Occupation Tax Shift Law• Open Space Tax Levy Law


Open Space Tax Levy Law• Sunshine Law• Breach of Personal Information Notification Act

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TCC RFP Possible Timeline• TCC develop RFP/TCA ………………………………….Now to Feb. 28, 2010• TCC develop standard tax levy resolution/ordinance ...Now to Feb. 28, 2010• TCC issue RFP………………….………………………….……..March 1, 2010• RFP response due March 31 2010RFP response due ………..…………………………..…………March 31, 2010• TCC evaluate/select finalists ……….…...........................................April 2010• Tax collector interviews ………………………………………….April/May 2010• Tax collector site visits …………………...........................................May 2010• Tax collector (preliminary) selection……………………………..…..June 2010• Tax Collection Agreement finalized …………………………..………July 2010• Tax collector selection deadline ………………………….……..Sept. 15, 2010

TCC Tax Collector Appointment ResolutionTCC Tax Collector Appointment ResolutionSign Tax Collection AgreementWithin 10 days after appointment, notify DCED per § 507(a)

• Act 32 county-wide collection begins ………………….………….Jan. 1, 2011- or -

[Part of TCC Overall Timeline] Jan. 1, 201222


Sunshine Law/Right-to-Know Law Application to Tax Collector Evaluation

• Sunshine Law – “Official action” and “deliberations” by a quorum of the members of an “agency” must take place at a public meeting – 65 Pa.C.S. § 704

• Executive sessions are allowed for:Personnel matters – discussion of any matter relating to employment, appointment, termination of employment, terms and conditions of employment, …. of any specific prospective public officer or employee – 65 Pa.C.S. § 708

A t ll t i i d d t t t t


o A tax collector is an independent contractor – not an employee or public officer – the personnel matters exception does not apply to a consultant/independent contractor –Easton Area Joint Sewer Authority v. The Morning Call, Inc., 581 A.2d 684 (Pa. Cmwlth. 1990)

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• Executive sessions are allowed for:Confidential matters – “to review and discuss agency business which, if conducted in public, would violate a lawful privilege or lead to the disclosure of information or confidentiality protected by law….” – 65 Pa.C.S. § 708(5) – might arguably protect confidentiality of tax collector financial statements

• “Agency” includes all committees authorized to take official action or render advice on matters of agency


business – 65 Pa.C.S. § 703• What about Tax Collector interviews? Is there

“deliberation”?

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• RKL – Under 65 P.S. § 67.708, what exceptions apply to Tax Collector submissions?apply to Tax Collector submissions?

Section 708(b)(3 ) – a record that if disclosed creates reasonable likelihood of endangering the safety of an information storage system?Section 708(b)(4 ) – a record regarding computer hardware or software that if disclosed creates reasonable likelihood of jeopardizing computer security?


reasonable likelihood of jeopardizing computer security?Section 708(b)(10)(i)(a) – a record used in predecisional deliberations – before presented to a quorum for deliberation?

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Section 708(b)(11) – a record that reveals a trade secret or confidential proprietary information?Section 102 definition of “trade secret”: Information, including a formula, drawing, pattern, compilation, including a customer list, program, device, method, technique or process that:(1) derives independent economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other persons who canascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. The term includes data processing software obtained by an agency under a licensing agreement prohibiting disclosure.

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Tax Bureaus –Delegate Conflict of Interest

• Act 32 § 507(e):“Eligibility of existing tax collection entities. Notwithstanding any provision of law to the contrary it shall not be regarded as aany provision of law to the contrary, it shall not be regarded as a conflict of interest for a delegate or alternate to participate in discussions and voting of the tax collection committee relating to the appointment of a tax officer, solely on the basis that the delegate or alternate also is an employee or member of the governing body of an existing tax bureau or other public tax collection entity which is under consideration for appointment as the tax officer or which has submitted a proposal for appointment as tax officer, or is an p p ppemployee or member of the governing body of a political subdivision participating in such an existing tax bureau or other public tax collection entity.”

• Trumps Ethics Act and Pennsylvania State Adverse Interest Act as to nonprofit tax bureaus.

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Tax Collector RFPRFP – Refer to handout

A. Taxes for which Services are Requested1. Earned Income Tax2. Local Services Tax?3. Business Privilege/Mercantile Tax?4. Per Capita Tax?5. Real Estate Tax?6. Services should include collection of current and


6. Services should include collection of current and delinquent taxes

Note: RFP refers to uniform tax enactment forms that are to be attached.

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Tax Collector RFPNew Uniform Tax Enactment Forms

• EIT• LST• Purposes for new, uniform tax enactments:

Same terms (other than rates)Same exemptionsAllow accurate, consistent, and cost efficient tax administration


Update tax enactment forms to conform to Act 32

• Should draft new tax enactment forms before finalize RFP

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Tax Collector RFPE. Proposal Minimum Content Requirements

9. Business Volume Capacity. The TCC is concerned about the capacity of tax collection agencies to handle the expanded volume ofcapacity of tax collection agencies to handle the expanded volume of business that might result from county-wide collection under Act 32. Please address thoroughly your capacity to handle effectively all tax collection services for current clients and clients for which you have or will be making proposals, including details of any planned steps to add people, facilities, or other resources. Please address specifically your bonding capacity limits available through the insurance company that provides your bonding, and also the amount of bonding required for your current clients and clients for which you are making proposals to provide tax collection services (including tax collection committees). What dollar bond amount do you estimate will be required from your firm during the next 2 calendar years for all clients? If applicable, please identify what steps your firm has taken or will take to increase bonding capacity. Has a bonding company ever revoked or reduced the amount of a bond carried by your firm?

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10. Conflicts of Interest. Provide a summary of any relationships or interests of your firm and the officers, directors, employees, or owners that might arguably conflict with the interests of the TCC or its constituent taxing authorities. Without limiting the foregoing, are there any family relationships between officers, directors, employees, or owners of your firm and officers, directors, employees, or owners of your auditing firm or any other provider of service to your firm?


other provider of service to your firm?

See discussion below under RFP and Tax Collection Agreement

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11. Detailed Background and Operating Information:a Does your firm meet all Tax Collector qualificationsa. Does your firm meet all Tax Collector qualifications

and requirements established by DCED under Act 32?b. Collector Act 32 knowledge/Act 32 procedure changesc. Collector technology – including electronic filing/Act 32

compliance/DCED best practices

Note: Technology is very important to Act 32


compliance, prompt and efficient tax collection, and fulfillment of Tax Collection Agreement requirements discussed below.

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11. Detailed Background and Operating Information:d. Procedures to ensure tax collected from all taxpayers

• Annual number of nonfilers identified• Annual number employer/individual taxpayer audits• Annual number of criminal prosecutions• Annual number of civil collection proceedings filed• Process for handling bankruptcies• Success history

Note: Tax Collector steps to maximize revenue through ensuring that no taxpayers are missed and all tax owed is collected = critical duty/differentiating factor.

See discussion below on these items.33


11. Detailed Background and Operating Information:

e Procedures to ensure collection of all taxes paid by employerse. Procedures to ensure collection of all taxes paid by employers or TCC residents through other tax collectors, and to ensure payment of all taxes owed by other tax collectors

f. Procedures to ensure employers and other tax collectors provide sufficient information – avoid perfect storm

i. Deposit procedures – length of time between receipt and deposit of tax checks

j Tax return processing procedures length of time after filing


j. Tax return processing procedures – length of time after filingk. Tax collector officesm. Legal staffo. Plans and arrangements for investment of tax funds

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11. Detailed Background and Operating Information:r. Sample reports to taxing authorities/timing for distribution of tax

funds u. Data breach – Explain your procedures to ensure the security and

confidentiality of information relating to and provided by taxpayers, including social security numbers and other confidential information. What safeguards do you have in place to avoid a data breach or other improper disclosure of confidential information? Has your firm ever experienced a data breach involving an unauthorized person obtaining access to confidentialinvolving an unauthorized person obtaining access to confidential information in your possession? In responding to this question, please include any data breach that required notice of breach to affected taxpayers under the Pennsylvania Breach of Personal Information Notification Act, 73 P.S. § 2301 et seq., and also any other breach that did not require such notice. Please provide an explanation of any such data breach. 35


12. Subcontractors and Outsourcing13. Reference Lists14. Litigation and Claims15. Financial, Insurance, Bonding, and Other

Information• Collector financial statements very important!

SAS 70 internal controls audit?


• SAS 70 internal controls audit?• CPA background information• See discussion below on these items

16. Transition Plan

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17. Fees and Charges

a. Transition fees, if anyb. % commission – if TCC wants same fee for nondelinquent

and delinquent tax collection feesc/d. % commission – if TCC wants different nondelinquent and

delinquent tax collection fees

Note: RFP does not address the issue of straight across-the-board % commission for all taxing authorities versus differingboard % commission for all taxing authorities versus differing % commission applicable to different taxing authorities – TCC will need to address this issue and, if decide on differing % commission, decide how to address with Tax Collector. See discussion below on Tax Collector Compensation, and on Collection Cost Allocation.

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18 Tax Collection Agreement18. Tax Collection Agreement

• Very important: to be attached to RFP• Tax Collector must identify upfront any desired

changes. “The TCC will not make changes in the final document if not raised in your response.”


• Speak now or forever hold your peace!

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Tax Collector RFPF. Attachments

• EIT list• EIT list• EIT sample enactment• LST list• LST sample enactment• Tax Collection Agreement• Tax Collection Agency Non-Collusion Affidavit


g y

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PASBO Tax Collection Agreement• “One of a kind”• Prior practice – Tax Collector presents document

reflecting Collector perspective – taxing authority eitherreflecting Collector perspective taxing authority either accepts “as is,” or makes minor changes

• New approach – start with comprehensive, balanced document that includes all protections needed for taxing authorities

• Reflects all Act 32 required provisions• Starting point only TCC legal counsel must be involved• Starting point only – TCC legal counsel must be involved

in developing final TCC Tax Collection Agreement• Cost to purchase, but will save much time and legal

expense; Collector forms will require extensive legal review just to ensure Act 32 compliance

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Tax Collection AgreementTax Collection Agreement Purposes• Act 32 and other law compliance• Ensure you collect maximum tax at least cost• Protect taxing authorities against loss• Improve/enhance tax collection process – raise

the bar on effective and cost efficient tax collectionF i ll ti t i th iti f t


• Fair allocation among taxing authorities of tax collector compensation/collection cost

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Tax Collection Agreement

• Ongoing reports and information necessary to allow TCC to oversee and evaluate tax collector performance

TCC will acquire expertise in tax collection oversightThrough strong Tax Collection Agreement and TCC oversight, TCC will enhance the tax collection process – maximize revenue and minimize costNot just about consolidation


Not just about consolidation

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Tax Collection AgreementKey issues in developing Tax Collection Agreement• Commencement date• Types of tax to be collected• Term of agreement• Tax Collector financial statement requirements• Tax Collector initial bond amount• Tax Collector office within TCD• Tax Collector investment earnings allocation rules• Distribution frequencyq y• Enforcement step expenses• Tax Collector compensation

Straight across-the-board commission?Different commission rate different taxing authorities?See discussion below 43

Tax Collection AgreementGeneral Table of Contents – structure

1. Designation as Tax Collector2. Tax and Related Amounts3. Term of Agreement4. Ongoing Duties and Covenants of Collector5. Ongoing Duties and Covenants of TCC


6. Tax Collector Compensation7. Confidentiality8. Liability and Indemnification

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Tax Collection AgreementGeneral Table of Contents – structure

9. Early Termination10.Effect of Termination11.Dispute Resolution12.Notices Under This Agreement13.Transition to Collection Under This Agreement


14.Miscellaneous15.Definitions

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Tax Collection AgreementDetailed Table of Contents

4. Ongoing Duties and Covenants of Collectora. General Dutiesb. Best Interests/Legal Compliancec. Tax Collector Financial Statementsd. Tax Collector Bonde. Collector Office/Staff/Technology/Resources/Safeguardsf Tax Revenue Deposit and Investment


f. Tax Revenue Deposit and Investmentg. Distributionsh. Deductions for Amounts Owed TCCi. Reports to TCC and Taxing Authorities

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4. Ongoing Duties and Covenants of Collectorj. Tax Recordsk R f d P i


k. Refund Processingl. Ongoing Duty to Maximize Collectionsm. Enforcement Stepsn. TCC Tax Appeal Boardo. DCED Mediationp Abatement of Interest or Penalties/Amnesty Programs


p. Abatement of Interest or Penalties/Amnesty Programsq. Amounts Collectedr. Meetings with TCC

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TCA Specific Provisions1(b): Commencement Date

• January 1, 2012 – the default date?• Some or all accelerate to January 1 2011?Some or all accelerate to January 1, 2011?• Considerations:

Do existing tax collection agreements end on December 31, 2010? If not, can they be terminated?Early benefit of beneficial tax collection costs achieved through county-wide negotiation


g y gOther benefits under new Tax Collection Agreement – as discussed belowTCC action to accelerate universal nonresident withholding – separate TCC action

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TCA Specific Provisions

1(b): Commencement Date• RFP should include acceleration option• Timeline – incorporate in overall TCC timeline

action plan for addressing acceleration

[Part of TCC Overall Timeline]



4(c): Tax Collector Financial Statements• 2 parts

Financial statement contentTCC approval of Tax Collector auditor



TCA Specific Provisions4(c): Tax Collector Financial Statements – Content

• Annual audited financial statementsCPA audit report

• Balance sheet (assets/liabilities/equity)• Income statement• Cash flow statement – state separately:

Collector businessassets, liabilities, equity, income, and cash flows

Aggregate trust fundassets, liabilities, and cash flows relating to all customers

Aggregate trust fundassets, liabilities, and cash flows relating to TCC

• Separate supplemental schedule breakdown each taxing authority• Above assumes for-profit collector – different terminology might

be appropriate for nonprofit tax bureau• Management letter

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TCA Specific Provisions4(c): Tax Collector Financial Statements – Content

• Annual audit report must specifically address:Collector receipt and disbursement of all tax funds (not justCollector receipt and disbursement of all tax funds (not just TCC funds)Reconciliation of monthly and annual reports to TCC with funds received for TCCSame for funds received and payable to other tax collectorsCollector compliance with TCA rules on bonding, deposits, investments, collateral, reports, distributions, tax records, etc.C ll t li ith LTEACollector compliance with LTEA

• Option: SAS No. 70 Independent Service Auditor’s Report – internal controls?

• TCC auditor [or taxing authority auditor] review of Tax Collector records

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TCA Specific Provisions4(c): Tax Collector Financial Statements – TCC

approval of Tax Collector auditor • Per LTEA, collector selects CPA, but TCC must

approve• Dilemma – how to resolve differences – particularly

considering that collectors will collect for multiple TCCs?

• Initial year CPA TCC due diligence on CPA then


• Initial year CPA – TCC due diligence on CPA, then specify in CPA initial agreement

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TCA Specific ProvisionsCollector CPA selection and approval• Subsequent years:

Collector notify TCC by May 1Collector notify TCC by May 1TCC due diligence and response by September 1If TCC disapproves – attempt to reach agreement – if no agreement by September 30, TCC may terminate

• CPA background informationOffice locations/employeesOther clients/experience in tax collector auditsO / pProfessional liability insuranceLegal proceedingsRelationships between collector and CPA firm

• Tax Collector periodic change of CPA encouraged54


TCA Specific Provisions4(d): Tax Collector Bond

• Act 32 rule – highest amount on hand during calendar year

• Note: relationship between distribution frequency and amount on hand

• Initial bond amount – estimate/include• Monthly reports – state highest amount on


Monthly reports state highest amount on hand during month

• If 10% greater than bond, midyear adjustment

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TCA Specific Provisions4(d): Tax Collector Bond

• Annual adjustment – to highest amount during preceding yearp eced g yea

• Possible bond amount reduction – based on internal controls, insurance, collector financial strength –must comply with DCED guidelines

• Permissible bonding companies• Bond continuing after termination of agreement• Penalty for failure to provide required bond amount• Penalty for failure to provide required bond amount -

$1,000 per day• Bond form

Act 32 requirementsFaithful performance bond vs. surety bond

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4(e): Collector Office, Staff, Technology, Resources and SafeguardsResources, and Safeguards

• Website requirements• Electronic filing and payment• Compliance with DCED Best Practices• Warranty of data breach safeguards


• Warranty of data breach safeguards

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TCA Specific Provisions4(f): Tax Revenue Deposit and Investment

• TCC Deposit and Investment PolicyAdd TCC d T C ll t f dAddresses TCC and Tax Collector fundsTax Collector funds a “trust fund” for taxing authoritiesAccount designated “Tax Fund Held for _________ County Tax Collection Committee”TCC funds not to be commingled with other TCCs Permitted investments


o Bank depositso Local government investment trusto U.S. government obligations?o Repurchase agreements?

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TCA Specific Provisions4(f): Tax Revenue Deposit and Investment • TCC Deposit and Investment Policyp y

Deposit collateral – just like public bodyTax Collector monthly reports – investment detailsCPA audit of investments

• Allocation of funds – 3 categories1.TCC taxing authority entitled to receive


g y2.Taxing authorities outside TCD entitled to receive3.Unidentified funds

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• Investment earnings allocation – follow fundInvestment earnings allocation follow fund allocation

Except unidentified fund earnings allocated to TCC taxing authorities based on amounts distributed during month (complexity of having earnings follow funds when identified)

I t t i t i


• Investment earnings payment – pay earnings in subsequent month per allocations

• Note: Tax collector does not retain earnings!

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TCA Specific Provisions4(f): Tax Revenue Deposit and Investment –Questions to be answered in developing TCA:

1.Should Collector be required to pay interest to taxing1.Should Collector be required to pay interest to taxing authorities instead of retaining earnings?

Notes: (a) Although there is some ambiguity, Act 32 does not expressly require such payment. (b) Could be substantial earnings on investment of funds received from multi-site employers (distribution required within 30 days after the end of the month that follows receipt of funds –after the end of the month that follows receipt of funds such funds might be held up to 90 days – or longer if not properly identified).

2.Should investment earnings be paid to tax collectors for other TCDs?

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TCA Specific Provisions4(f): Tax Revenue Deposit and Investment –Questions to be answered in developing TCA:

3.How to allocate investment earnings of funds identified as belonging to TCC taxing authorities? Allocate based on undistributed invested daily balances?4.How to allocate investment earnings on unidentified funds? Allocate to TCC taxing authorities based on funds distributed during the month to such taxing authorities?


g g

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• Safety valve – allows TCC to give alternate y gdirection on allocation and payment of investment earnings.

• Lockbox deposit system – details not addressed in TCA, but should have dialogue with Tax Collector concerning use of bank


lockbox deposit system, electronic payments, etc. – the goal is to get all funds into your account ASAP

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TCA Specific Provisions4(g): Tax Collector Distributions

• Distributions within TCDWeekly? Monthly? Daily when identified funds exceed

ifi d t?specified amount?Distributions to tax collectors for other TCDs – monthly? Act 32 general rule – 60 days after receipt?

• Statutory interest owed to other tax collectors – who pays – Tax Collector or taxing authorities?

• Unidentified fundsFrozen until identifiedIf not identified within 2 years, distribute to municipality where collected

4(h): Deductions for Amounts Owed to TCC – Tax Collector payment of TCC operating expenses

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TCA Specific Provisions4(i): Monthly Reports to TCC and Taxing

Authorities

D t il ll ti d di b t• Detail on collections and disbursements• Other oversight information

Number of returns filedNumber of nonfilers identifiedNumber of returns processedSteps taken to identify nonfilersp yTax collection legal proceedings filedLegal proceedings against Tax CollectorCollector ownership changeMaterial adverse change in Collector financial condition

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TCA Specific Provisions4(i): Monthly Reports to TCC and Taxing

Authorities

• Also required:Annual reportsRevenue projection assistanceSterling Act tax credit information – by November 1Data breach reports



TCA Specific Provisions4(j): TCC Tax Records Policy for Tax Collector

• Required tax record database• Required tax record databaseElectronic tax recordsTax receipt informationTax returnsLST exemption certificatesIndividual taxpayer list


Individual taxpayer listEmployer listOther detailed informationSearchable database

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TCA Specific Provisions4(j): TCC Tax Records Policy for Tax Collector

• Retention periodRetention period• Tax record back-up• Tax record ownership• Tax record copies requested by TCC or

taxing authorityT d t f


• Tax record transfer

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TCA Specific Provisions4(l): Ongoing Duty to Maximize Collections

• PA Department of Revenue Agreement• Dialogue with taxing authoritiesDialogue with taxing authorities• Other lists• Commercial census – travel every road• Mass mailings and amnesty programs• Review of tax returns – complete by August 1• Taxpayer audits• Claims against other tax collectors

Note: Tax Collector steps to maximize revenue through ensuring that no taxpayers are missed and all tax owed is collected = critical duty/differentiating factor.

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TCA Specific Provisions4(m): Enforcement Steps – Collector must pursue:

• Criminal prosecutions• Wage attachments• Liens• Civil proceedings• Enforcement steps expenses

Taxing authorities charged for filing fees (subject to taxpayer reimbursement)?Collector absorb all legal fees?gTaxing authority absorb legal fees over $1,000?Cases of general interest – all taxing authorities share expense?Taxpayer payment of specified Collector fees + filing fees?

• Abatement of interest or penalties/amnesty programs70


TCA Specific Provisions4(n): TCC Tax Appeal Board

• Tax Collector participate in appeals

4(r): Meetings with TCC

5: Ongoing Duties and Covenants of TCC• Authorized representatives – to interact

with Tax Collector


• Tax enactments

71

TCA Specific Provisions6: Tax Collector Compensation

• Straight across-the-board commission?• Mixed rate commission?Mixed rate commission?• Commission rates?• Tax rate increases – reduce collection commission %?• Delinquent tax collection commission – same or

different from nondelinquent?• Expense reimbursement – none, except as discussed

above Option: Possibly reimburse postage forabove. Option: Possibly reimburse postage for advance approved amnesty programs and mass mailings.

• See discussion below on Collection Cost Allocation.

72


TCA Specific Provisions8: Liability and Indemnification• Collector indemnification• TCC indemnification• TCC indemnification

9: Early Termination• TCC termination “for cause”• “Cause” defined• Required steps after termination


Required steps after terminationTransition to new collectorTax records transferFinancial statement delivery and bond continue

73

TCA Specific Provisions11: Disputes

• Arbitration?• Specify venue for arbitration or court proceedings• Specify venue for arbitration or court proceedings

13: Transition to Collection Under Agreement• Advertisement• Notice to employers• Transfer of unidentified funds from prior tax collector


p• Tax return processing for prior year – done by new

Act 32 Tax Collector• TCC tax collection transition plan

74


Tax Collector Weighted Scoring Sheet

• Refer to handoutLi t i t t l ti f t• List important evaluation factors

• Score each vendor 1-10• Weight factor 1-5• Multiply score X weight• This provides an “objective” evaluation


p j• “Subjective” evaluation important also• One more tool in evaluation process

75

TCC Jurisdiction Over LST/Other Taxes• Beware: Conflicting interpretations• As to TCC jurisdiction over other taxes, § 509(k) states:

“In addition to the power and duties enumerated in this ti [ d ti TCC t l ll ti fsection [mandating TCC control over collection of

income tax within TCD], when designated by the tax collection committee, a tax officer may collect other taxes levied pursuant to [LTEA; Act 1], or other statutory law.”

• Appears to give TCC the right to decide unilaterally whether LST and other taxes will be collected on a county-wide basis under TCC contract and oversight essentially tobasis under TCC contract and oversight – essentially to consolidate collection of LST and other taxes in addition to the mandated consolidation of income tax collection

• But DCED interprets differently – taxing authority consent is required for TCC jurisdiction over taxes other than EIT

76


TCC Jurisdiction Over LST/Other TaxesTCC LST Possible Timeline• SDs/Munis complete TCC survey of interest

in having TCC collect LST...................................................December 2009

• TCC receives Tax Collector RFP responses….……..................March 2010

• TCC shares with SDs/Munis RFP responses on collection cost and other material terms/asks SD/Munis sign LST Contract..…March 2010

• LST Contract return deadline……………………………………June 30, 2010

• TCC finalizes Tax Collection Agreementwith Tax Collector..........................................................September 15, 2010with Tax Collector..........................................................September 15, 2010

• SDs/Munis adopt new LST tax levy resolution or ordinance (to extent necessary to achieve uniformity –requires discussion after review of tax facts)……..October/November 2010

[Part of TCC Overall Timeline]77

TCC Jurisdiction Over LST/Other Taxes

LST Contract Basic Components

• LST contract = separate contract between TCC and• LST contract = separate contract between TCC and SD/muni

• SD/Muni authorizes TCC to enter Tax Collection Agreement

• Optional: SD/Muni agrees to pay share of TCC budget costs per TCC bylaws


costs per TCC bylaws

• The LST Contract will continue for the same term as the Tax Collection Agreement


Collection Cost Allocation• TCC tax collection cost allocation plan

TCC i ll iTCC operating expenses vs. tax collection cost allocation – Act 32 leaves to TCC decision how tax collection cost will be allocated - see § 507(c)

Today – third party vendors charge different % collection commissions to different taxing authorities, based on actual tax collection cost


,

Collection Cost AllocationMany factors influence actual tax collection cost incurred by tax collectorDifferent tax rate example – same actual dollarDifferent tax rate example same actual dollar cost to collect 2% EIT vs. 1% EIT – means actual % or per tax dollar cost incurred to collect higher EIT rate is halfo Aggregate tax revenue collected is one of less

significant factorso Number of returns – most significant factoro Employer base – important factorp y po Out-of-jurisdiction employer payment claimso Taxpayer demographicso Delinquency rates/other factorso Per tax dollar cost greater in urban area vs. suburban

area80


Collection Cost AllocationHow decide on tax cost allocation plan?o Again – no “one size fits all”o Fact driveno Uniform rates and demographics = straight across-the-

board %o Many possible alternatives

– Vary commission % based on tax rate (higher tax rate, lower commission %)

– Vary commission % based on historic commission rates charged individual taxing authorities

– Vary commission % based on historic number of tax returnsAnnual retroactive adjustment based on number of tax returns– Annual retroactive adjustment based on number of tax returns

– Tax collector input on equitable allocation – ask bid with aggregate %, and % allocated each taxing authority

– Decide on allocation of legal fees incurred in tax appeals or collection proceedings (tax collector absorb or allocate to taxing authority?)

– Separate delinquent collection rate?81

TCC Insurance• Public official/errors and omissions (protecting

governing body delegates, TCC officers, and employees, if any)

• Property and casualty insurance (including general liability)

• Crime coverage (for loss of TCC funds due to dishonesty)

• Workers compensation insurance (if TCC employees)


employees)• PASBO-sponsored insurance program –

favorable negotiated rates + policy terms tailored to TCC needs


Shortening the Process• Process can be shortened – but not short

circuited!• Shortening might be appropriate if:

Current tax bureau serves all taxing authorities –strong consensus for continuationSame tax collector currently serves most, but not all, taxing authorities


Shortening the Process• What can be shortened:

RFP – can be eliminated, submitted to just one tax collector or shortenedcollector, or shortened

o But consider carefully – even if vendor is known, the discipline of required response might raise questions and lead to enhancements and better tax collection

Tax Collection Agreement can be shortenedCan merge TCC with existing tax bureauCan create identical governing bodies and parallel


Can create identical governing bodies and parallel meetings for Tax Bureau and TCC

• Shortening – fact specific – must be tailored to TCC facts

84


Shortening the Process• Basic TCC requirements that still apply to all:

Officers (including Open Records Officer)L l lLegal counselBylawsDetailed TCC Overall Timeline/action planTCC management structure decisionsTCC finance decisions – budget/funding/auditor/bankTCC insurance


TCC insuranceLST decisionTax Appeal Board appointment/policies

85

Shortening the ProcessTax Collection Agreement (unless merge Tax Bureau and TCC)Adopt mandatory and other policies, including:Adopt mandatory and other policies, including:

o Right-to-Know Records Policyo Investment Policy

Department of Revenue Information Exchange AgreementNew uniform EIT enactmentsT iti l


Transition plan

Fiduciary duty to oversee tax collection into future –to ensure effective and cost efficient tax collection!

86


We Already Have Tax Bureau !?Note: Cannot opt out of Act 32 – TCC requirements still apply• Option 1 – 2 organizations (same or separate g (

governance of bureau vs. TCC)• Option 2 – 1 organization (TCC takes over existing

bureau)• Option 3 – dissolve tax bureau; retain third party

vendor• IssuesIssues

PSERS?Compensate “prior owners”?Many others

• Fact sensitive – no “one size fits all”87

Send text questions using the “Chat” function at the left side of your screen


function at the left side of your screen. Type message in box and click the arrow to send.

88


Thank you for your participation!

REMINDER: Webcast host sites are asked to collect all Attendance Forms and return to the PASBO office for attendance and credit purposes. Forms must be received by


November 25 for credit to be given.

89

Kegel Kelin Almy & Grimm LLP

Kegel Kelin Almy & Grimm LLP is a regional law firm with offices in Lancaster, Pennsylvania. KKAG is solicitor and general counsel to 16 school districtssolicitor and general counsel to 16 school districts and joint school systems – and bond counsel, finance counsel, or special counsel to many others in Central and Eastern Pennsylvania. KKAG is recognized for expertise on school district and municipal taxes. In addition, KKAG frequently serves Pennsylvania school districts for unusual and challenging problems projects or litigationchallenging problems, projects, or litigation.

KEGEL KELIN ALMY & GRIMM LLP24 North Lime Street Lancaster, PA 17602 TEL 717-392-1100 FAX 717-392-4385

www.kkaglaw.com

90


ACT 32 INSURANCE PACKAGE NOW AVAILABLE

• In another effort to meet all the needs for implementing Act 32, PASBO has established a new insurance product pspecifically designed to meet the needs of Tax Collection Committees. The package includes directors and officers as well as general liability protection for minimal cost. For more information, contact Jennifer Powers at the PASBO office at (717) 540-9551 or [email protected].

• Act 32 Task Force counsel Clarence Kegel and PASBO


staff have extensively reviewed insurance options for TCC’s and believe the new insurance program will be beneficial and affordable for TCC’s.

91

SUPPORT GEORGE LONGRIDGE FOR PSERS BOARD OF TRUSTEES

• PSERS Code permits the active non-certified members of the system to elect one member to the PSERS Retirement Board once every three years for a term of three years. Ballots were mailed out on November 4 andfor a term of three years. Ballots were mailed out on November 4 and must be received no later than 12:00 noon EST. by December 2, 2009

• George M. Longridge, PRSBA, Business Manager at Elizabethtown Area School District, is running for the non-certified seat on the Board. George has experience in both urban and rural districts of diverse size, and received his M.B.A. from Penn State University with a focus on Finance and Investments. George is running against incumbent Pat Tozer, who is a Guidance Secretary in the Pennsbury School District.PASBO t G ’ l ti ff t d t th t i• PASBO supports George’s election efforts and requests that you give George consideration and your support by placing an “X” in the box next to his name on the PSERS Non-Certified Election 2009 Official Ballot when you receive it in the mail.

• PLEASE ENCOURAGE OTHER PASBO MEMBERS TO VOTE FOR GEORGE AS WELL!

92


NOTES


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__________________ COUNTY TAX COLLECTION COMMITTEE

[Sample] Tax Collector RFP (Available at http://www.pasbo.org/act32resources.asp) ________________ ____, 2010

The Tax Collection Committee requests proposals for tax collection services according to

the following terms.

A. Taxes for which Services are Requested

1. Earned Income Tax – attached is a list showing tax rates levied by the school districts and municipalities within our TCD and the approximate amount of tax collected in the most recent fiscal year. The list includes applicable low income exemption amounts. Except for minor variations, the school districts and municipalities will be using a uniform form of tax enactment, a sample of which has been attached.

[2. Local Services Tax – attached is a list showing tax rates levied by the school districts and municipalities and the approximate amount of tax collected in the most recent fiscal year. The list includes applicable low income exemption amounts. Except for minor variations, the school districts and municipalities will be using a uniform form of tax enactment, a sample of which has been attached.]

[3. Business Privilege/Mercantile Tax – attached is a list showing tax rates levied by the school districts and municipalities and the approximate amount of tax collected in the most recent fiscal year. Sample tax enactments have been attached.]

[4. Per Capita Tax – attached is a list showing tax rates levied by the school districts and municipalities and the approximate amount of tax collected in the most recent fiscal year. The list includes applicable low income exemption amounts. Except for minor variations, the school districts and municipalities will be using a uniform form of tax enactment, a sample of which has been attached.]

This sample Tax Collector RFP is a starting point for a TCC developing an RFP under Act 32. This sample was developed by the PASBO Act 32 Task Force. It is a work in process, and will likely be modified from time to time based on ongoing consideration of Act 32 issues and dialogue with vendors. Different RFP forms will be appropriate for different TCCs. This form should be adapted to the facts and needs of the TCC. In addition, it is imperative that the TCC include the proposed TCC Tax Collection Agreement as part of the RFP and consult with and follow the advice of legal counsel on the RFP, the TCC Tax Collection Agreement, and Act 32 implementation issues.


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[5. Real Estate Tax – attached is a list showing tax rates levied by the school districts and municipalities and the approximate amount of tax collected in the most recent fiscal year. Except for minor variations, the school districts and municipalities will be using a uniform form of tax enactment, a sample of which has been attached.]

6. Services should include collection of current and delinquent taxes. [TCC will

need to modify this statement if real estate taxes are included.]

7. [Tax collection agencies must submit a proposal for collection of all taxes listed above.] [Tax collection agencies may submit a proposal for one or all taxes listed above.]

8. The attached TCC Tax Collection Agreement form is an integral part of this RFP and should be reviewed carefully.

B. Time for Commencement of Services

1. Commencement of services. Tax collection services will commence [January 1, 2012.] [January 1, 2011.] [Tax collector will be responsible to process 2011 tax returns filed in 2012.] [Tax collector will be responsible to process 2010 tax returns filed in 2011.]

2. Contract term. [You are requested to provide a proposal for a contract of ___ years.] [You are requested to provide alternate terms for contracts of 3, 4, and 5 years.]

C. Proposal Format and Submission Requirements

1. Provide 15 copies

2. Proposal due ____________________

3. Direct any questions and submit proposals to:

______________________________, [Executive Director] [Secretary] ______________________________ County Tax Collection Committee [street address] [city/state/zip] Telephone: _________________________ Fax: _______________________________ E-Mail: ____________________________

D. Tentative Timetable for RFP Decisionmaking

Proposal due date _______________________ TCC evaluation of proposals _______________________ TCC selection of finalists _______________________ TCC site visits _______________________ TCC appointment of tax collector _______________________


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[Drafting Committee Note: The Act 32 deadline for appointment of the tax collector is September 15, 2010.]

E. Proposal Minimum Content Requirements

1. Cover Letter. The cover letter should be signed by a principal of the firm.

2. Firm Background and Contact Information. Provide the following information (one page):

a. Firm name, address, telephone number, fax number, e-mail address, and website address.

b. Contact person name and title.

c. Firm officer and director names and addresses.

d. Legal structure of the firm (e.g., corporation or limited liability company).

e. Date of incorporation or organization.

3. Firm Overview. Provide a brief (one page) overview of your firm, including types of taxes collected, number of years providing tax collection services, total tax revenue collected for each type of tax in the last 5 years, and number of employees.

4. Firm Distinguishing Characteristics. Provide a summary (one page) of characteristics that distinguish and differentiate your firm, and why the TCC should select your firm, including any promotional material you wish the TCC to consider.

5. Firm Offices. It is important to the TCC that the firm providing tax collection services have an office within or reasonably close to the TCD. Please provide a list of current and proposed offices, and specify which office or offices will provide service to the TCD.

6. Site Visits. It is important the TCC be able to tour and observe the offices your firm uses to provide tax collection services. Please indicate whether your firm will allow the TCC to tour and observe your offices and operations.

7. Key Employees. Provide a list and resume or other statement of qualifications of key employees, including the individuals who will be the TCC primary and secondary contact persons and other individuals who perform key roles in the tax collection process.

8. Other RFP Responses. Provide a list of other tax collection committee RFPs to which your firm has responded or plans to respond.


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9. Business Volume Capacity. The TCC is concerned about the capacity of tax collection agencies to handle the expanded volume of business that might result from county-wide collection under Act 32. Please address thoroughly your capacity to handle effectively all tax collection services for current clients and clients for which you have or will be making proposals, including details of any planned steps to add people, facilities, or other resources. Please address specifically your bonding capacity limits available through the insurance company that provides your bonding, and also the amount of bonding required for your current clients and clients for which you are making proposals to provide tax collection services (including tax collection committees). What dollar bond amount do you estimate will be required from your firm during the next 2 calendar years for all clients? If applicable, please identify what steps your firm has taken or will take to increase bonding capacity. Has a bonding company ever revoked or reduced the amount of a bond carried by your firm?

10. Conflicts of Interest. Provide a summary of any relationships or interests of your firm and the officers, directors, employees, or owners that might arguably conflict with the interests of the TCC or its constituent taxing authorities. Without limiting the foregoing, are there any family relationships between officers, directors, employees, or owners of your firm and officers, directors, employees, or owners of your auditing firm or any other provider of service to your firm?

11. Detailed Background and Operating Information. In addition to the information provided above, please address:

a. Does your firm meet all tax collector qualifications and requirements established by DCED under Act 32?

b. Your knowledge of Act 32, changes to your current procedures that will be required as a result of Act 32, special challenges you foresee in collecting taxes under Act 32, and measures you are taking to address any special challenges.

c. Your use of technology in collecting taxes and interacting with taxing authorities, employers, taxpayers, and other tax collectors. Please describe in detail the technology used in collecting the types of tax you propose to collect. Please specifically address the availability of online filing. Has your technology been modified to accommodate information and reports required under Act 32? Does your technology system comply with all Best Practices listed in the DCED document titled: “Act 32 Collection Project Document # 5: Final Report on EIT Collection Practices”? Please

identify any of the Best Practices with which your technology system does not comply.

d. Your procedures to ensure taxes are collected from all taxpayers owing tax, including your system that identifies employer and individual taxpayers who fail to file tax returns, and employers or individual


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taxpayers whose returns are audited. Please identify one or more jurisdictions for which you currently provide tax collection services and provide numbers for each identified jurisdiction describing:

Annual number of nonfilers identified who failed to file required returns.

Annual number of employer and individual taxpayer audits conducted.

Annual number of criminal prosecutions.

Annual number of civil collection proceedings filed (with separate breakdown of district justice and county court filings).

Annual number of district justice judgments transferred to court to establish lien.

Annual number of judgments reduced to payment plans.

Annual number of wage attachments filed.

Your process for handling taxpayers in bankruptcy.

Other data you deem helpful to show enforcement or delinquent collection steps.

Please also provide information on your rate of success under each category.

e. Your procedures to ensure collection of all taxes paid by employers or TCC residents through other tax collectors, and to ensure payment of all taxes owed by other tax collectors. Specifically, please describe your procedures for reconciling payments to and from other tax collectors.

f. Your procedures to ensure that employers and other tax collectors provide sufficient information when employee withholding amounts are remitted, in order to allow prompt distribution to taxing authorities of all funds collected from employers and other tax collectors.

g. Your procedures to ensure that employers withhold tax at the correct rate.

h. Your procedures to verify the accuracy of individual low income exemption claims.

i. Your method of receiving and depositing tax funds remitted by taxpayers, including the length of time between receipt and deposit of a check. Does this time vary at different periods during the year? Does your firm accept credit card payments?


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j. Your procedures for processing employer and individual tax returns, including the average length of time after filing that is required for you to complete processing. Does this time vary at different periods during the year? Please also discuss procedures by which you reconcile filed individual tax returns with employer payments.

k. Do you have an office within the TCD where taxpayers can pay taxes? Can taxes be paid at financial institutions where you deposit tax funds?

l. Explain and provide copies of any documents relevant to your “customer

services” for taxpayers. Telephone and in-person availability? Hardship and installment payment plan procedures? Other?

m. Your legal staff or resources to address legal questions relating to tax collection (including identification of procedures and legal counsel used for filing and prosecuting criminal and civil litigation).

n. Your requirements for your staff who are not attorneys to ensure adequate knowledge of and continuing education on tax law and tax collection processes.

o. Your plans and arrangements for investment of tax funds. Have you historically segregated tax funds of different taxing authorities in different accounts?

p. What financial institutions are used for deposit of tax funds? What due diligence steps are taken to ensure the safety of tax fund deposits and investments, including collateralization?

q. Explain and provide a copy of procedures for complying with the Pennsylvania Taxpayer Bill of Rights.

r. Explain and provide samples of reports to taxing authorities and timing and distribution of tax funds, including any changes to your procedures that will be implemented as part of complying with Act 32 and requirements of the Tax Collection Agreement. Are you willing to provide distributions to taxing authorities more frequently than required by Act 32? Weekly distributions? What is the most frequent distribution system you could accommodate?

s. Provide a copy of any applicable ethics or other policy for protection of taxing authorities or taxpayers.

t. Provide samples of all other forms used in connection with tax collection procedures, including tax returns, tax regulations, delinquent tax collection letter forms, or other information disseminated to taxpayers.


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u. Explain your procedures to ensure the security and confidentiality of information relating to and provided by taxpayers, including social security numbers and other confidential information. What safeguards do you have in place to avoid a data breach or other improper disclosure of confidential information? Has your firm ever experienced a data breach involving an unauthorized person obtaining access to confidential information in your possession? In responding to this question, please include any data breach that required notice of breach to affected taxpayers under the Pennsylvania Breach of Personal Information Notification Act, 73 P.S. § 2301 et seq., and also any other breach that did not require such notice. Please provide an explanation of any such data breach.

12. Subcontractors and Outsourcing. Identify and explain your use of any subcontractors or outsourcing including any tax functions that are subcontracted or outsourced, in whole or in part, outside Pennsylvania or the United States.

13. Reference Lists. Provide a list of all taxing authorities for which you collect each type of tax you propose to collect for us, including number of years served, a list of all taxing authorities that have discontinued use of your firm’s services in the

past [10] years, and contact information for each taxing authority listed.

14. Litigation and Claims. List any legal proceeding (arbitration, complaint, court action, or investigation) or claim filed, commenced, or made by a school district, municipality, other government body, employer, or taxpayer against your firm within the last 10 years. Please also provide a brief summary of the status or final resolution of any proceeding or claim.

15. Financial, Insurance, Bonding, and Other Information

a. Provide outside of the proposal packet, 3 copies of: (1) Your firm’s most

recent fiscal year end audited financial statements and management letters or other written comments provided by your CPA in connection with the financial statements. (2) Independent Service Auditor’s Report relating to

internal controls prepared by your CPA in accordance with SAS No. 70, if any. (3) CPA Background Information per the TCC Tax Collection Agreement § 4(c)(iii) (The TCC will share this information only as deemed necessary to the evaluation process, with due regard for the confidential nature of this information, or as the TCC solicitor determines is required under the Sunshine Law and Right-to-Know Law.)

b. Provide information on insurance types and limits that you carry, including employee dishonesty or crime coverage.

c. Identify the insurance company that provides your bonding and provide sample bond form.


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d. Explain your internal controls to ensure the accuracy of distributions to taxing authorities, and to ensure against loss of funds or inaccurate accounting.

e. Explain the process you undertake annually to provide taxing authorities an external audit of your finances and tax collection accounts. Please include a sample copy of annual financial/audit information provided to taxing authorities. Please explain changes you will make to this process to comply with Act 32 or the Tax Collection Agreement.

f. Has any firm officer, director, or key employee of your firm ever been arrested for, convicted of, or entered a plea of guilty or nolo contendere to a criminal charge other than a summary offense? Has any other employee been arrested for, convicted of, or entered a plea of guilty of nolo

contendere to a criminal charge relating to theft or dishonesty?

g. Explain the background checks you perform when employees are hired, and whether background checks are periodically updated.

h. Other protections against loss of funds for taxing authorities?

16. Transition Plan. Explain the steps and timetable for transition of tax collection services from the current tax collector or collectors if you are not the current tax collector. Please provide a detailed monthly timeline of the various stages, including the work plan or task list for each stage, and specifically address steps you will take to ensure payment of amounts owed by out-of-jurisdiction tax collectors relating to time periods prior to the effective date of your contract, and also steps you will take to ensure you have sufficient information to collect delinquent taxes owed from time periods prior to the effective date of your contract.

17. Fees and Charges. List any fees and charges for transition of tax collection services to your firm, for ongoing collection of the tax, or for any other matter.

a. Transition fees. Explain any fees you will impose for transition, including transition of records from current tax collector, interaction with current tax collector, and any other transition services.

b. Nondelinquent and delinquent tax collection fees combined. If the TCC prefers a combined fee for both nondelinquent and delinquent tax collection services, provide the following information stated separately for each type of tax:

(1) Basic collection commission. If the TCC prefers a straight across-the-board percent collection commission for all taxing authorities, what percent commission will apply? Would your firm agree instead to provide services for a pre-established annual lump sum


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amount payable in monthly installments? If so, provide the lump sum amount for each contract year.

(2) Incentive proposal. Are you willing to offer any proposal that would provide an incentive to maximize tax collections? If so, explain.

(3) Other charges? Any other applicable charges? Are postage and mailing charges included in the basic collection commission?

c. Nondelinquent tax collection only. Provide the same information as above

that will apply for nondelinquent tax collection services if the TCC prefers separate charges applicable to nondelinquent tax collection and to delinquent tax collection services.

d. Delinquent tax collection only. Provide the same information as above that will apply for delinquent tax collection services if the TCC prefers separate charges applicable to nondelinquent tax collection and to delinquent tax collection services.

(1) Taxpayer fees. As to delinquent tax collection under any alternative, provide a list of all proposed fees and costs you would charge taxpayers for delinquent tax collection steps, and estimated annual revenues from such items. Do you propose to retain these amounts or pay these amounts to the taxing authority?

[Drafting Committee Note: This sample RFP is written to solicit proposals for the collection of earned income tax. If the TCC wishes to use this RFP to solicit proposals for the collection of local services tax, business privilege/mercantile tax, per capita tax, or real estate tax, the TCC will need to modify the language in the Fees and Charges section accordingly.]

18. Tax Collection Agreement. Please review the attached TCC Tax Collection Agreement, and identify any changes you would require or suggestions for improvement in this document. It is critical that we have your response to this question. Your response will be among the factors the TCC considers in selecting its tax collector. The TCC will not make changes in the final document if not raised in your response.

19. Other Information or Comments. Please provide any additional information you wish the TCC to consider.

20. Non-Collusion Affidavit. Your proposal must include, in fully completed, signed, and notarized form, the attached Non-Collusion Affidavit.


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Earned Income Tax List


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Earned Income Tax Sample Enactment


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Local Services Tax List


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Local Services Tax Sample Enactment


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Business Privilege/Mercantile Tax List


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Business Privilege/Mercantile Tax Sample Enactment


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Per Capita Tax List


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Per Capita Tax Sample Enactment


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Real Estate Tax List


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Real Estate Tax Sample Enactment


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[The PASBO Act 32 Task Force is working on developing a sample Tax Collection Agreement form for use by TCCs. The Tax Collection Agreement should be attached to the RFP.]


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__________________ COUNTY TAX COLLECTION COMMITTEE

Tax Collection Agency Non-Collusion Affidavit

Tax Collection Services Proposal dated ___________ ____, 2010. I state that I am _______________________ of _____________________________________ (title) (name of firm) and that I am authorized to make this affidavit on behalf of my firm, and its owners, directors, officers, and employees. I state that: (1) The terms of this proposal have been arrived at independently and without consultation, communication or agreement with any other provider or potential provider of tax collection services. (2) We have not discussed with other providers of tax collection services the tax collection committees to which we have submitted or will be submitting proposals for tax collection services, or the terms under which our firm is offering to provide tax collection services to taxing authorities or tax collection committees. (3) None of the terms of this proposal have been disclosed, directly or indirectly, to any other provider or potential provider of tax collection services, and they will not be disclosed, directly or indirectly, to any other provider or potential provider of tax collection services until made public by the Tax Collection Committee. (4) No attempt has been made or will be made to induce any other firm or person to refrain from submitting a proposal for tax collection services to the Tax Collection Committee or to submit any intentionally noncompetitive proposal or other form of complementary proposal to the Tax Collection Committee. (5) The proposal of the firm is made in good faith and not pursuant to any agreement with, or inducement from, any other firm or person for our firm to submit a complementary or other noncompetitive proposal to the Tax Collection Committee. (6) ___________________________, its affiliates, subsidiaries, owners, officers, directors, (name of firm) and employees are not currently under investigation or order by or from any court or governmental agency, and have not in the last 10 years been accused of, investigated for, or subject to any order relating to, any alleged act prohibited by state or federal law in any jurisdiction, involving conspiracy, collusion, or other violation of law with respect to bidding on any public contract.


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(7) I and my firm acknowledge that the above representations are material and important, and will be relied on by the Tax Collection Committee in entering into a contract for the services for which this proposal is submitted. I understand and my firm understands that any misstatement in this affidavit is and shall be treated as fraudulent concealment from the Tax Collection Committee of the true facts relating to the submission of the proposal. Signature

Print Name and Title

-------------------------------------------

State of _______________________ : : ss County of _____________________ : Sworn to and subscribed before me this _____ day of ___________, 2010.

My Commission Expires: ________________ Notary Public


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Instructions for Non-Collusion Affidavit

1. This Non-Collusion Affidavit is material to any contract awarded pursuant to this proposal. According to the Pennsylvania Antibid-Rigging Act, 62 Pa.C.S.A. § 4501 et seq., governmental agencies may require Non-Collusion Affidavits to be submitted together with proposals.

2. This Non-Collusion Affidavit must be executed by the member, officer, or employee of the firm who makes the final decision on the terms included in the proposal.

3. Bid rigging and other efforts to restrain competition, and the making of false sworn statements in connection with the submission of proposals are unlawful and may be subject to criminal prosecution. The person who signs the Affidavit should examine it carefully before signing and assure himself or herself that each statement is true and accurate, making diligent inquiry, as necessary, of all other persons employed by or associated with the firm.

4. The term “complementary proposal” as used in the Affidavit has the meaning commonly

associated with that term in the bidding process, and includes the knowing submission of a proposal higher or less favorable than the proposal of another firm, an intentionally high or noncompetitive proposal, and any other form of proposal submitted for the purpose of giving a false appearance of competition.

5. Your statement under #6 that the firm, its affiliates, subsidiaries, owners, officers, directors, and employees are not currently under investigation or order by or from any court or governmental agency, and have not in the last 10 years been accused of, investigated for, or subject to any order relating to, certain matters does not prohibit the TCC from awarding a contract to the firm, but may be grounds for consideration of whether the TCC should decline to enter the contract on the basis of lack of responsibility.

6. Failure to file an Affidavit in compliance with these instructions will result in disqualification of the proposal.


Document # 22

94762.11 11/09/09

RFP Possible Timeline

Step Date

1. TCC issue RFP March 1, 2010

2. RFP response due March 31, 2010

3. TCC evaluate/select finalists April 2010

4. Tax collector site visits May 2010

5. Tax collector contract finalized June 2010

6. Tax collector contract finalized July 2010

7. Tax collector selection deadline September 15, 2010

[Drafting Committee Note: Site visits can provide valuable insight into vendor services. The Drafting Committee recommends vendor site visits as part of the RFP evaluation process.]


__________ COUNTY TAX COLLECTION COMMITTEE[Sample] Tax Collector RFP

Weighted Scoring Sheet (Available at http://www.pasbo.org/act32resources.asp)

COLLECTOR: ______________________ REVIEWER:_____________________

Score 1-10, with 10 as high A B CWeight 1-5, with 5 as high Score Importance Total Score

(1-10) Weight (1-5) (A x B) Comments

1. Proposal Minimum Content Requirementsnumber of years/number of employees (experience & capacity)

site visit (tour,observation)

qualifications of key employees

no conflicts of interest

quality of ethics policy

use of subcontractors/outsourcing

2. Financial Informationhealth of financial statements

SAS No. 70

CPA firm background

collector insurance coverage/provider

quality of internal controls

external audit process

criminal misconductadequacy of background check procedure

3. Receipt, Deposit, & Investment of Funds time between receipt & deposit

tax return processing speed

segregation of fundscollateralization of deposits

lock-box capability

willing to comply with TCC Unidentified Tax Funds Policy

willing to comply with TCC Deposit and Investment Policy

1



Weighted Scoring Sheet



4. Collection & Bonding Capacitynumber of other TCC RFP's being responded to

current collection capacity/total revenue collected

current bonding capacity limitscollector bonding company

procedural preparation for Act 32

plan for future expansion & growth

5. Technologycurrent use of technology

on-line filing/credit card acceptancecompliance with DCED best practices

data breach procedures & history

6. Customer Services for Taxpayersoffice proximity to tax collection district

telephone & in-personavailable legal staff

training for non-lawyer staff

quality of taxpayer forms

7. Enforcementsuccess rate in criminal, civil, & district justice cases

reconciliation procedures for out-of-district collections

8. Steps to Maximize Collectionsemployer & tax preparer education

procedures to verify information provided

procedures to verify proper amounts withheldwilling to comply with Tax Collection Agreement requirements

for maximizing collections

2






9. Distribution of Fundsquality of sample distribution reportswilling to distribute as required by Tax Collection Agreement

willing to pay interest as required by Tax Collection Agreement

10. Transition Planwilling to comply with relevant parts of TCC Tax Collection Transition Plan

process for collecting prior delinquencies

reasonableness of transition fees

11. Price to CollectEIT

LST (optional)

Business Privilege/Mercantile (optional)

Per Capita (optional)

Real Estate (optional)

other costs/service considerations (postage)

extra delinquency collection cost

reasonableness of proposed taxpayer delinquency fees

12. General Complianceprocedure for complying with PA Taxpayer Bill of Rights

willing to sign Tax Collection Agreement without substantial

revision

willing to comply with TCC Records Policy for Tax Collector

complete non-collusion affidavit

13. Intangibles/Misc.TCC comfort/confidence ("fit")

collector professionalism

3





(1-10) Weight (1-5) (A x B) Commentscollector philosophy

collector adaptability

willing to accommodate extra work

(e.g., homestead mailings for real estate tax)

14. References/Reputationother taxing authorities served

client turnover

litigation & claims against collector

4


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EIT TAX COLLECTOR SELECTION, APPOINTMENT AND CONTRACT

Webcast Recording Order Form Act 32 charges the Tax Collection Committee (TCC) to appoint a county-wide tax collector

by September 15, 2010. The PASBO Act 32 Task Force and Kegel, Kelin, Almy & Grimm

LLP have been working on numerous technical assistance issues to comply with the

requirements of Act 32. One deliverable is a sample TCC Tax Collector RFP for use by the

Committee in the receipt of proposals from firms interested in providing tax collection

services. This program reviews the RFP in an easy to understand format that can easily be

adapted by your TCC, and discusses factors to be considered in selecting and preparing an

agreement with your tax collector.

A recording of the webcast program will be available for download approximately two weeks

after program date. Whether you use it as a review or share it with fellow employees unable

to attend the live webcast, the information is at your fingertips!

Fill out and send your order form to PASBO today!

Name: __________________________ Title:______________________________

School Entity:__________________________________________________________

Billing Address: ________________________________________________________

City:______________________________State:_______ Zip: __________________

Phone:________________________Ext._______ Fax: _________________________

Email: ________________________________________________________________

If you are tax exempt, enter your tax ID here:__________________________________ (If tax ID is not provided, add 6% sales tax to your order below)

Attendee by December 3* Non-Attendee or after December 3 (*Available to paid webcast attendees only)

Online Access @ $15 Member Online Access @ $50

Plus sales tax if applicable $______ Non-member Online Access @ $75

Total Amount Due $______ Plus sales tax if applicable $______

Total Amount Due $______

METHOD OF PAYMENT (Select one) Check Made Payable to PASBO Send Invoice PO#_______________ Credit Card

Account Number_______________________________ Expiration____________

Cardholder’s Name ___________________________________________________

Signature ___________________________________________________________

Attendee Early Bird Discount Offer – December 3 deadline!


Webcast Attendance Form

Each participant must complete a form for attendance and credit purposes. Forms are to

be collected at the host site and returned to PASBO within 7 days following the program date.

If this form is not returned, you will be marked as absent and no credit will be given.

WEBCAST HOST SITE INFORMATION:

Webcast Date: 11/19/09 Webcast Title: EIT Tax Collector Selection, Appointment and Contract

Host Site (Name of school entity/organization):

Name of Host Primary Registrant: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

PARTICIPANT INFORMATION: (Each participant must complete a form)

___ I am participating at my home/HOST LEA ___ I am a GUEST LEA at a site other than my own

Attendee Name: Title:

School Entity: Relationship to School Entity:

Employer (if different from school):

Mailing Address:

City: State: Zip:

Phone: ( ) Fax: ( )

Email:

I am requesting the following credit: (No credit can be given unless this form is signed and returned) __CEU Credit for PASBO Professional Registration. (For a course transcript, go to the Professional Registration

section of the PASBO website at www.pasbo.org) __ CPE Credit for Certified Public Accountants

I certify that I participated in the entire live webcast presentation.

Participant’s Signature Date______________ Please return this form by ONE of the following methods no later than 7 days following the program date: Mail to PASBO, PO Box 6993, Harrisburg, PA 17112

Scan and email to [email protected] Fax to 717-540-1796

CPE certificates will be mailed. PASBO CEU credits will be uploaded to your CEU history.

(Credit is available for participation in the live program only)

P:\Workshops\09-10\WEBCASTS\Webcast Attendance Form 8-09.doc

Pennsylvania Association of School Business Officials Mailing Address: Office Location: P.O. Box 6993 2608 Market Place Harrisburg, PA 17112-0993 Harrisburg, PA 17110 Telephone 717-540-9551 www.pasbo.org FAX 717-540-1796


http://www.pasbo.org/

mailto:[email protected]

Pennsylvania Association of School Business Officials · PASBO Webcast Presentation 1. EIT TAX...

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