“The Consequences of Conflicting Delinquent Property Tax Collection Laws in The Commonwealth of Pennsylvania.”

“The Consequences of Conflicting Delinquent Property Tax Collection Laws in The

Commonwealth of Pennsylvania.”

By Gordon S. Rhoads

For the Department of Political Science

Arcadia University

April 2007

© 2007 Gordon S. Rhoads

Table Of Contents:

Abstract… 3

Literature Review… 4

Taxing Districts Face Choices… 8

PLTA and Fidelity Home Abstract, Inc v. East Stroudsburg Area School District… 11

City of Allentown v. Richard J. Kauth and Lourdes Kauth… 15

Portnoff Law Associates… 16

A response to Portnoff Law Associates… 18

“The Portnoff Process” and the Tax Claim Bureau Process… 19

In the Wake of the PLTA v. East Stroudsburg Area School District Decision… 20

The Best Interests of The Pennsylvania School Districts… 25

Conclusion… 30

Bibliography… 33

Appendix… 35

a) PLTA v. East Stroudsburg Area School District… 33-46
b) Allentown v. Kauth… 46-50
c) Memo from Adrienne Verdone, Esq., CLTP, PLTA President… 51
d) PA Senate Bill no. 508 2/18/03 MCTLA amendment to May 16, 1923 (P.L.207, No.153)… 52-54
e) Local taxes are the majority of local school funding chart… 55
f) Local taxes by source chart… 56

2

Abstract:

Taxes and fees assessed by various government entities, including school districts,

are crucial to the operation and delivery of goods and services, primarily public

education, to the population. This report will establish that the collection of taxes and fees

by private entities is a healthy thing for the taxing entities in the Commonwealth.

Pennsylvania students may face a significant decrease in resources because of delinquent

taxes and a current legal conflict. This report sheds light on the nature of choices that

government entities face when competing for essential revenue, as well as point out the

judicial and legislative history involved. Research compiled over two years and opinions

of four attorneys, who are authorities on this conflict, present their opinion throughout the

thesis. A resolution is necessary for the fiscal health of the Pennsylvania School Districts

and this explains why.

.

3

Everyone who owns real estate must pay property taxes, unless on a rare

occasion, the property is purchased with a stipulated tax abatement. Taxes are

required to provide services to all residents of a particular taxing district, including

the property owner who pays his or her tax bill. The services that the tax bill supports

include funding school operating expenses, clinics, libraries, public hospitals, road

maintenance, playgrounds, parks, pensions, and law enforcement just to name a few.

As long as taxes have been levied there have been instances of late or completely

delinquent payments of the bill. What happens when money for these services is

reduced because of the non-payment of taxes? Legal remedies are in place in the

Commonwealth of Pennsylvania to ensure that taxing districts, such as townships,

school districts, municipalities, cities, and boroughs, receive their funds in a timely

manner and maintain revenue to continue providing necessary services.

Literature Review:

Thomas Paine wrote in the Rights of Man that, “On the subject of supplying the

Treasury by new taxes the Assembly declined taking the matter on themselves,

concurring in the opinion that they had not authority.”1 Thomas Paine responded to Mr.

Edmund Burke with a belief that liberty was the responsibility of all in a society.

Published in 1791, The Rights of Man has been considered a political masterpiece. It was

not the authority of the Assembly to decide how to supply the Treasury, rather, it was the

people.

In 1791 America had very little global influence. Yes, this nation had won its

battle for sovereignty, but only two years after the Bill of Rights was adopted, the Nation
1
Eckler: Thomas Paine, p. 80

4

had a long way to go. In a great society, a democracy for example, who does the

individual have a responsibility to? Some argue that each of us has a responsibility to our

nation and liberty; others may argue that responsibility lies in self-preservation.

Taxes are a fundamental tool for maintaining society and all of the activities that a

government must undertake. Taxes, in one sense, are an investment in the future. When

one commits funds to the preservation of society on a whole, then that person commits to

the preservation of himself or herself, as they are a member of their society. When one is

a participant in society, then it is the responsibility of that person to preserve that society.

On a large scale, it becomes the responsibility of everyone to perpetuate taxes, or a web

of support, for the continuation of liberty, security, and services.

The argument over the role of government may be widely argued, however it is

assumed that the fundamental roles of government include establishing law & order,

providing public services (however limited) and at least some level of protection. A

government cannot exist without the support of the citizenry. Whether the government is

imposed or elected, it cannot survive without the labor and finances of the people.

Paine elaborated on taxes writing in The Rights of Man that, “the funding system

is not money; neither is it properly speaking, credit. It in effort creates upon paper the

sum which it appears to borrow, and lays on a tax to interest, and sends the annuity to

market, to be sold for paper already in circulation. If any credit is given, it is to the

disposition of the people to pay the tax, and not to the government, which lays it on.

When this disposition expires, what is supposed to be the credit of Government expires

with it.”2

2
Eckler: Thomas Paine, p. 119

5

Essentially the government is afforded by the citizenry, the right to choose how to

extend its finances. For the most part, the government chooses to finance services that

advance the will of the people. In some circumstances, the government may choose to

fund any number of programs or activities that are not the will of the people. When this

occurs, it is the theory of Locke that the government looses the credibility that the

citizens extend to it. That is, if the government is not extending finances advancing the

will of the people, or finance with the intent to advance the future prosperity of the

people, then the government will then loose their own credibility. This means that the

government always has an expired approval when the interest of the people is not

maintained, and that the people have the right to choose another government.

Taxes are at the heart of this approval. The people’s support comes from the

correct and approved levying of taxes. The goods and services provided are for the

benefit of all, or so it is assumed. The citizens will always expect that services rendered

to their ‘neighbor’ will also be an option for themselves. Taxes are to be a shared burden,

as well as a shared benefit. When participation in this foundation of support is diminished

by a voluntary withholding of tax commitment, then society itself is threatened.

John Simmon’s assessment of Lockean theory quotes Locke’s writing, “No

society can, of course, be a scheme of cooperation which men enter voluntarily in a literal

sense…. Yet a society satisfying [hypothetical contractarian demands] comes as close as

a society can to being a voluntary scheme, for it meets the principals that free and equal

persons would assent to under circumstances that are fair. In this sense its members are

autonomous and the obligations they recognize self-imposed.”3

3
Morris, p. 133

6

This means that a society operates with the cooperation of all of the citizenry.

What happens when citizens choose to dissent and choose to separate themselves from

the obligations of society? Without the dynamics of interaction and cooperation, society

would cease to exist. The implications of being a member of society include a

responsibility to the other members of society. When one participates in the interplay of

society and daily life, then one is obligated to his fellow man. What does this mean? In

Lockean theory, the undertone is a responsibility to each other. Living in society is a

commitment and obligation in itself.

Jack Fruchtman compared Lock and Paine by pointing out the theories of property

ownership and their implications on poverty. Fruchtman wrote,

“Paine approached the problem of poor people by formulating a legal
fiction: those who owned property owned a debt to the poor. He thought of the
owners of property as not really owners, but lessees. They occupied the land
perhaps through inheritance, perhaps through sale, perhaps through thievery. In
any case, there was no original deed, because the first person who took ownership
had no “rights” to the property. He simply claimed it and seized it. Paine
genuinely believed that poverty was the outcome of civilization. There was no
such thing as poverty in a state of nature. In that pre-political condition, before
civil society came into being, a person’s life might have been threatened by wild
animals, or even by other men. But he was not poor. He had plenty from the earth,
and all he needed to do was use it. This, too, differed from Locke, who had
presumed that even in a state of nature, a person might take control of a certain
amount of property once he mixed his labor with it, that is, cultivated it and made
things grow on it.”4

A society is a place for the interaction of everyone. In human society, each person

has a role. What is the role of a property owner? According to Paine, property belonged

to everyone. And to Locke, a property could be something claimed, especially if that

property was developed for any particular use. These theories affirm that ownership and

society are shared phenomenon. Those that “own” property have an obligation to those

4
Fruchtman, p. 360

7

who do not own property. Those who own property also have an obligation to others who

do own property. The obligation includes an affirmation that society includes the

property owner and relies on the property owner for a certain level of support. Property

ownership is an accomplishment of societal participation that announces wealth and or

success.

Paine’s theory of property ownership and owning a debt to the poor is a

correlation to property ownership and taxation. There is a debt owed to society as a

whole. That debt will ensure the survival of society as well as the survival of

property owners to come. The theory of taxation is simple. As Paine elaborated on

“ownership” there really is no single “owner” as everyone has a share of the space on

this planet. The personal use of that space is something precious, as well as a debt

owed to all those who do not have the privilege to that land.

Taxing Districts Face Choices:

In Pennsylvania, the taxing districts have choices when it comes to selecting

the process by which they will collect delinquent taxes. Two specific references will

be brought up throughout this thesis that are important to understand. The first is the

Pennsylvania Municipal Claims and Tax Liens Act of 1923 or “MCTLA.” The

second is the Pennsylvania Real Estate Tax Sale Law Act of 1947 or “RETSL.” The

MCTLA provides provisions that allow for a taxing district to collect delinquent

taxes, defined as all fees plus cost of collection through the use of a third party, and

ultimately if no payment is made within a year, the taxing district has the right to

proceed to liquidate the property at a sheriff sale.

8

The RETSL enables a County Tax Claim Bureau to proceed to an upset sale after

one year has passed on a delinquent tax claim. However, this process may take up to

three years, as it provides delaying remedies for delinquent property owners.

Typically, taxes are assessed based on the value of a given property. The

county assessor has the role of declaring a value of a given property, at which point

an annual tax bill is assessed by multiplying the taxing authority’s millage rate,

which is generally one tenth of one percent by the assessed value. We will further

discover the problems that taxing by assessed property values pose to services such

as education later.

Once the tax bill has become delinquent, which is at the end of the calendar

year of the dated original tax bill, under the RETSL, the tax record must be turned

over to the County Tax Claim Bureau. At the point of receiving the claims at the Tax

Claim Bureau, a penalty fee is added to the amount of the tax and a tax lien is filed

against the property. Edward Rupert, CPE, Butler County wrote about the RETSL

reporting,

“The Real Estate Tax Sale law starting in Title 72 §5860.101 is
specific about the due process of selling a person’s home or property for the
nonpayment of tax due. The main thrust of the Tax Sale Law is to make sure
the owner or reputed owner has actual notice of the pending sale…
The result of the PA Real Estate Tax Sale Law (RETSL) was to
consolidate all delinquent real estate tax claims into one agency as a
convenience to local officials, property owners, prospective purchasers, and
title searchers. This consolidation greatly helps to eliminate the accumulation
of delinquent taxes and the revival of liens permitted by prior lien laws. This
law replaces the county treasurers’ and city treasurers’ sale by a single
procedure under the Tax Claim Bureau. The RETSL provides a means of
conveying [a] better title to a purchaser at tax sale.
The RETSL was designed to benefit local governments in the
accelerated collection of delinquent real estate taxes without causing undue
hardship on the delinquent property owner.

9

To the extent that the RETSL reduces the amount of delinquent real estate
taxes as a percentage of the market value of taxable property, it increases the
total tax yield and also serves to reduce the share of total taxes born by those
who promptly pay their taxes.5

If a taxing district chooses to use the MCTLA to collect, they may hire a third

party private collection agency or firm to hasten the process. In either case, using the

RETSL or MCTLA, the tax is delinquent and owed to the taxing authority. Recently,

a debate has arisen contesting the methods by which taxing authorities may collect

taxes. The RETSL requires that all delinquent claims go to the Tax Claim Bureau,

and the MCTLA allows for a third party to collect delinquent taxes more

expediently. Several problems arise in the Commonwealth of Pennsylvania because

of the concurrence of the RETSL and MCTLA.

First, in order for a third party to collect the delinquent taxes under the

MCTLA, the third party must have access to the documents that record the reported

owner of the property, amount of delinquent tax, and property information to

proceed. This is the first conflict of the concurrence of the MCTLA and RETSL. The

RETSL requires that all documents pertaining to the delinquency statistics are

forwarded to the Tax Claim Bureau, but the MCTLA makes no mention of who

holds claim to the delinquent tax records. Second, the Tax Claim Bureau is

responsible for providing certifications that the properties are either free-and-clear of

liens, or if they are in a status of delinquency. With the presence of a third party

collector, such information is not made available to the Tax Claim Bureaus and

information pertaining to property status is in the hands of the third party collector.

To understand the legal conflict one may compare the collection processes of the Tax
5
Edward Rupert, AAP Journal Assessors Association of Pennsylvania, Issue 5 Volume 2 spring 2004

10

Claim Bureau using the RETSL and a third party collector named Portnoff Law

Associates, Ltd., which uses the process outlined in the MCTLA.

PLTA and Fidelity Home Abstract, Inc v. East Stroudsburg Area School District:

This case was argued on September 13, 2006 in the Commonwealth Court of

Pennsylvania Court of Common Pleas of Monroe County. It is necessary to cite the

facts of the case based upon the testimony elicited at the December 7, 2005 hearing:

The Facts of this case are as follows: Briefly since 2003 the
Tax Collectors, following the instructions of the School Districts,
have not made returns of delinquent school taxes for tax years 2002,
2003 and 2004 to the Monroe County Tax Claim Bureau . . . Instead,
the School Districts have contracted with Portnoff Law Associates,
Ltd (hereinafter referred to as “Portnoff”), to act as their solicitor for
purposes of collecting delinquent taxes using the provisions of the
Municipal Claims and Tax Lien Act. As a result, the Bureau has no
records of paid or delinquent school taxes for properties located
within the two School Districts for the tax years 2002, 2003 and 2004.
The School Districts are able to provide information regarding
delinquent school tax records to the general public upon request;
however, the information is not readily available for viewing by the
general public, nor is the information updated after the delinquent
taxes are forwarded to Portnoff for collection. Consequently, title
searchers, title insurance companies, mortgage companies, banks,
attorneys and the general public cannot obtain this information from
the Bureau or the School Districts; instead, they must contact
Portnoff. Anyone requesting information from Portnoff can receive a
verbal report on the status of such taxes free of charge; however, if a
written report is requested, the cost is $25.00 to $50.00 depending on
whether it is an expedited request. When requesting a written report
from Portnoff, it takes a minimum of five business days to receive the
information for a regular request, and it takes two business days to
receive the information on an expedited request. All responses to
requests are sent by fax. Although identified as certifications, the
reports prepared by Portnoff are not signed certifications. This same
information, if it were available at the Bureau, could be viewed by the
requester either in printed form by looking at the hard copy file or by
using the computer terminals that are available for public use free of
charge. If a tax lien certificate is requested from the Bureau, the
requester would receive an “official” certification of the status of the

11

taxes, whether paid or unpaid, on a specific parcel of real estate
within a matter of minutes.

The cost of this official tax lien certificate is $10.00. Real estate
attorneys and title agents who handle real estate matters regarding
properties located in the School Districts have suffered monetary
losses due to the lack of or inaccuracy of information regarding the
status of the school taxes. They have also experienced delays in
receiving information from tax records which previously had been
instantly available at the Bureau. Confusion has been created for
delinquent taxpayers over who they should make delinquent tax
payments to – the Bureau or Portnoff. Taxpayers have also
experienced problems obtaining credit because the tax liens filed by
Portnoff in the Monroe County Prothonotary’s Office have not been
satisfied even though they have been paid.6

From the facts of this case one can see that this is not a debate over the

existence of third party tax collection. This is a complex conflict about who has

claim to delinquent tax records. The Pennsylvania Land Title Association asserts that

because Portnoff Law Associates is collecting delinquent taxes for East Stroudsburg

Area School District, there is an increased rate of confusion and delay in the

reporting of public information, as well as an increased cost of operation for the real

estate industry.

In an interview with Sandy Dixon, Esq., the Chairman of the Pennsylvania

Land Title Association’s Legislative and Judicial Committee, he stated that, “PLTA

v. East Stroudsburg is essentially a business issue. My role in the case was to protect

those who certify sales against receiving false or inaccurate information caused by

the transfer of delinquent taxes from the East Stroudsburg School District to Portnoff

Law Associates instead of to the Monroe County Tax Claim Bureau. Every taxing

district can turn over claims to a tax bureau or can turn over [the delinquent claims]

to a private attorney or agency for collection. There is a legal process. The Real
6
PLTA v. East Stroudsburg Area School District No. 226 C.D. 2006

12

Estate Tax Sale Law states that an upset tax sale must be held, then a judicial sale, a

public sale, and eventually a repository sale. Portnoff will proceed directly to a

sheriff sale. The RETSL gives the delinquent owner more time to make

arrangements or ultimately pay. The law also states that the information must be

turned over to the Tax Claim Bureau.”7

PLTA v. East Stroudsburg Area School District was brought by the

Pennsylvania Land Title Association to argue that they believed that the RETSL

gave the Tax Claim Bureau the right to all claims. Ensuring that the Tax Claim

Bureau has all of the tax record is to the advantage of title searchers. For title

searchers, winning the case disregards the best interests of students and taxing

districts dependent on the tax revenue, rather furthers their interest in making their

businesses operate faster and at a lower cost. The case does not answer the question,

which law applies to the taxing districts? If the issue truly is about availability of

public information, then the RETSL and MCTLA cannot both have application in the

Commonwealth. The Case mentions the City of Allentown v. Kauth (2005) noting

the Court in that case held that, “the two statutes are very similar and operate

concurrently with one another…” essentially agreeing with the decision yet choosing

to pick and choose sections of both the MCTLA an RETSL for general application.

Again, the concurrent application of these statutes does not work.

Attorney Jane Roach is an elected member of the Board of Directors of the

Pennsylvania Bar Institute and served as the attorney for Pennsylvania Land Title

Association in the case PLTA v. East Stroudsburg Area School District. Ms. Roach

elaborated in interview that, “The Tax Claim Bureaus are slower to collect than
7
Sandy Dixon Esq., 3/28/07

13

private collectors, but there are sound reasons for a delay in the sale of someone’s

property. Tax sales take longer because it is sound law.”

Ms. Roach talked about how she felt about the role of a private collector for

delinquent taxes and she stated, “The Pennsylvania Land Title Association says that

there is nothing wrong with private collection.” Roach believes that private

collection is not necessarily as effective as the Tax Claim Bureau and continued,

saying that, “It’s absolutely of no interest to Fidelity Abstract or PLTA whether [a

taxing district] hires a private collector. But, we question the availability of public

information when Portnoff Law Associates is contracted. To collect 4% of the taxes

[Portnoff] holds 100% of the record. They charge $25 for a title search of these

records, and property owners have paid Portnoff Law Associates then received

notices of a tax sale.” Ms. Roach believes that the confusion has been especially

difficult for senior citizens. She said, “Some seniors didn’t realize that for some

years they had to pay the Tax Claim Bureau and other years they were required to

pay Portnoff Law Associates. Because of this confusion, and believing that their

taxes were paid, some of their homes went to tax sale.”

Ms. Roach explained the crux of the situation saying, “Title companies are

making more mistakes because Portnoff Law Associates and the Tax Claim Bureaus

are holding records for inconsistent years. For example, when Portnoff Law

Associates started to collect, they told school districts to pass on their records to

Portnoff. That is against the law. According to the law, all records must go to the Tax

Claim Bureau. The Tax Claim Bureau did not object. For several years [the records]

were stored at the school district and Portnoff Law Associates took files as needed.

14

The problem is that Portnoff Law Associates only needs 4% of the tax records but

has all of the records, causing an extra search for records by contacting Portnoff Law

Associates.”8

City of Allentown v. Richard J. Kauth and Lourdes Kauth:

On May 12th 2005, the Court of Common Pleas of Lehigh County decided

City of Allentown v. Kauth taking care to note that,

“The County argues that this language expresses an intent by the
legislature that taxing districts coordinate their tax collection efforts through
county tax claim bureaus. Those taxing districts stand to lose the protection
afforded by Section 312 [of the RETSL] if municipalities such as the City
may proceed with free and clear judicial sale under the MCTLA. Although
the County acknowledges that the RETSL did not expressly repeal any
specific provisions of the MCTLA, it contends that the operative provisions
of the two statutes are irreconcilable and that the RETSL, which was enacted
later in time, impliedly repealed the MCTLA…”9

The reality of the situation is that the RETSL was simply an alternative to the

MCTLA. Simply because the RETSL was enacted after the MCTLA, that does not

mean it repeals the MCTLA. It would seem that before PLTA v. East Stroudsburg,

this case was the scheme of the Lehigh County Tax Claim Bureau to return tax

claims to the Bureau.

“As the trial court aptly noted, the MCTLA and RETSL are not
inconsistent with one another; rather, they permit, through strikingly similar
and parallel mechanisms, a taxing authority to expose a delinquent property
for an upset sale… Whether the judicial sale is affected under the MCTLA or
the RETSL the intent of the legislature is the same: to return real property to
productive use under new ownership.”10

8
Jane Roach, Esq. 3/30/07
9
City of Allentown V Kauth No. 2060 C.D. 2004 No. 2061 C.D. 2005
10
ibid

15

This court rightly found that the “main thrust” of both the MCTLA and

RETSL is not who collects the delinquent taxes or how, rather that the delinquent tax

is legally collected, restoring the property to a source of revenue once again.

“We hold that the two statutes are very similar and operate
concurrently with one another, due to the fact that the RETSL establishes an
alternative for the collection of delinquent tax claims, but not a mandatory
alternative. The County’s argument would require us to find, in derogation of
the express language used by the legislature, that RETSL is mandatory. We
find no merit to the County’s claim that any or all of the provisions of the
MCTLA have been impliedly repealed by the RETSL.”11

Portnoff Law Associates:

Michelle Portnoff, President of Portnoff Law Associates stated in an

interview on April 9th, 2007 that, “I think that the biggest obstacle that Portnoff Law

Associates faces is the Commonwealth Court decision in November [deciding that

the] RETSL and MCTLA can take place concurrently. It doesn’t make any sense.

You can’t have two collectors collecting the same debt. I think that in a conflict in

court, a legislative clarification is needed. Under Pennsylvania law, the legislature

has the right to basically remedy legislation when it’s interpreted differently from its

original intent.”12

What does Pennsylvania Land Title Association v. East Stroudsburg Area

School District mean for Portnoff Law Associates? Portnoff Law Associates is a firm

that prides itself in the fact that it can collect more efficiently than the Tax Claim

Bureaus as well as with more concern for the individual taxpayer. In their initial

communication to a taxing district they solicit that:

11
City of Allentown V Kauth No. 2060 C.D. 2004 No. 2061 C.D. 2005
12
Michelle Portnoff Esq., 4/9/07

16

“Portnoff Law Associates offers the only viable long-term solution to your
delinquent real estate tax problem. With nearly twenty years experience collecting
delinquent real estate taxes and municipal user fees, we can collect your delinquent
real estate taxes much more efficiently and fairly than any other service in the
Commonwealth of Pennsylvania. Our firm affords the highest rate of return in the
Commonwealth, and our clients consistently experience reduced delinquency rates
in the years subsequent to the implementation of our collection process.
Portnoff Law Associates is not a collection agency, and it does not operate
like one. Unlike the Tax Claim Bureau, Xspand or any other collection agency,
Portnoff Law Associates operates under legislation that allows the fair and
reasonable costs of collection to be passed through to delinquent taxpayers. Our
clients enjoy the unique advantage of maintaining total control over the entire
collection process.
The process utilized by our firm offers your taxing district the following
benefits. We urge you to refer to this table when comparing various delinquent tax
collection services:

The Portnoff Process ™
Amounts Remitted 100% of principal, penalties, and interest
to date of collection
Length of collection process Less than 1 year
95% + of principal, penalties and interest
Percentage of claims collected to date of collection
Commission charged to taxing district 0%
Remittance Weekly remittance of 100% of principal,
penalties, and interest to date of collection
Reduced delinquency rates in Yes
subsequent years
Hardship Program Yes

The efforts of our firm are directed toward habitually delinquent taxpayers
who have the means to pay their taxes timely, but choose not to do so. We believe
that it is unfair for a taxing district to require its good citizens who timely pay their
taxes to subsidize those property owners who refuse to pay their taxes year after
year.
We urge you to review the track records of the organizations you wish to
consider for the task of delinquent tax collection. Some of the companies that
purchase delinquencies are known to lack compassion when dealing with delinquent
property owners.
Because we are a professional law firm that operates on behalf of its clients,
we offer a unique process that protects the infirm, the elderly, the sick, the disabled,
and those delinquent taxpayers on limited incomes. We are proud to administer a
Hardship Program, the parameters of which are set by the taxing district, which

17

ensures that those disadvantaged property owners remain safe from the treat of
losing their homes or accruing any legal fees.”13

A Response to Portnoff Law Associates:

Steve Levin of the Pittsburgh Post-Gazette wrote an article describing the

burden a bill from Portnoff Law Associates placed on a couple who bought their first

home in McKeesport Pennsylvania.

“The property had belonged to Welch's father, and there was an
outstanding tax debt of $1,549.82 owed to the McKeesport Area School
District. The couple sent a check for $1,600.05 to the company that acted as
their closing agent to forward payment to Portnoff Law Associates, a
Wynnewood, Pa., collection firm.
But the settlement agency delayed sending the check, and by the time
it was received, Portnoff had added a $150 fee to the bill. Now, instead of
being free and clear homeowners, Gregory and Welch still owed $99.77.
Had they paid it then, or forced the settlement agency to pay it, their
problems would be over. But they didn't do the former and a two-year statute
of limitations prevents them from doing the latter.
Four years later, the couple owes Portnoff more than $1,700. The
original $99.77 bill rose as high as $1,089.04 this January before the couple
managed a $500 payment.”14

Some have debated the very existence of a third party collector. Is it the role

of anyone else, other than the government, to impose a function of the government?

One can equate the existence of Portnoff Law associates to any privatized entity that

serves the public as the government otherwise would if it had the resources. Private

prisons, and security companies fill a void and provide a service more cheaply than

the government, and they operate within the auspices of the government, just as

Portnoff has been hired to collect delinquent taxes for various taxing districts.

“The Portnoff Process” and the Tax Claim Bureau Process:
13
Sample letter signed by Alan B. Portnoff Esq., acquired from firm employee orientation, not
dated
14
Steve Levin: A Dream Foreclosed: Small Mistakes, Giant Consequences, Pittsburgh Post-Gazette, 6/7/
2004

18

In an interview with Michelle Portnoff she was asked, “What makes PLA

better than the Tax Claim Bureau in the function of collecting delinquent taxes?” She

responded, “The RETSL mandates 2 ½ years to collect. For example, if the county

Tax Claim Bureau collected 2006, then a tax sale wouldn’t take place until 2009”

“Under the MCTLA you may give 30 days notice before proceeding… Generally 90

percent of taxes and fees are usually paid on time or are current. For the mass

population, there is no change when Portnoff Law Associates is the collector of

delinquent taxes and fees. The county Tax Claim Bureau may use the MCTLA to

collect [delinquent taxes] but they can’t get their act together to collect as efficiently

as the MCTLA allows… The public sector is not state of the art [enough] for the use

of a MCTLA process.”

One benefit of contracting Portnoff over forwarding claims to the Tax Claim

Bureau is Portnoff’s ability to swiftly collect delinquent taxes for school districts and

taxing districts as well as return the full amount without withholding a percentage of

the claim, as the Tax Claim Bureau withholds 5% of the collected amount. When

asked to elaborate on why the Pennsylvania Land Title Association has an interest in

whether or not Portnoff Law Associates collects the delinquent taxes, Portnoff said,

“Most clerks aren’t driving to the county Tax Claim Bureau or to a 3rd party, most

[title certification requests are] done by email or fax.” 15

Title insurance companies are increasingly impatient to allow for a

reasonable return time for their requests. Portnoff provides all requests for tax payoff

amounts via email or fax within 5 days. They have an entire department dedicated to

the return of information requested via written communication, email, or fax.
15

19

Attorney Sandy Dixon of Ticor Title Insurance Company and Chairman of

the Pennsylvania Land Title Association’s Legislative and Judicial Committee said,

“We have no objection to private collection but our whole issue is the right to get

records easily, inexpensively, and locally. The role of title insurance companies is to

ensure that the property is free of taxes, and this case is to ensure that role.”16

Michelle Portnoff responded to the question asking her to define her solution

to Pennsylvania Land Title Association’s claim that the records should be returned to

the Tax Claim Bureau. Her response was, “I think that the way to make information

most accessible is to make it available electronically… The best result allows access

by the public for up to the minute records and a 3rd party can provide that service

best.”17

In the Wake of the PLTA v. East Stroudsburg Area School District Decision:

The opinion of the court on February 2, 2006 was not in the favor of Portnoff

Law Associates.

On February 2, 2006, the trial court granted the motion for
peremptory judgment and issued a writ of mandamus: 1) that the School
Districts and tax collectors are to make future annual returns to the Bureau; 2)
that the School Districts are to provide to the Bureau all of the School
Districts’ books and records for the tax years 2002, 2003, and 2004; 3) that
the School Districts also are to provide a detailed disclosure to the Bureau of
the status of all real estate taxes for the applicable tax years; 4) that the
School Districts and tax collectors are to make payments for the delinquent
taxes shown on the returns only to the Bureau; 5) that the School Districts are
to relinquish all future payments for delinquent taxes to the Bureau and to
provide to the Bureau detailed property descriptions for which the payments
were made; 6) that the School Districts are to file a satisfaction of liens for
payments received on municipal liens; and 7) that the School Districts are to

16
Sandy Dixon Esq., 3/28/2007
17

20

provide full tax lien payoff information in writing, at no charge, within five
business days of any written request.18

The Trial Court decision ordered that essentially all delinquent claims are to

be forwarded to the Tax Claim Bureau. Also ordered was a return of all claims to the

tax claim bureau for the years 2002-2004, years that Portnoff Law Associates is

actively collecting. Also, the Court ordered that the School Districts are responsible

for providing lien information in writing at no charge to anyone who makes a request

for that information in writing.

This order is supposed to make lien payoff information more accessible to

title insurance companies, however the implication of this decision will create chaos

for the taxpayers, the school district officials, Portnoff Law Associates, and

eventually for the Tax Claim Bureau. This case is on appeal, and both PLTA and

Portnoff Law Associates are pursuing a legislative remedy to the problem. Problems

arising from this order would overwhelm school districts and the Tax Claim Bureau

in labor and costs. Also consider the taxpayer who may have been on an established

payment plan with Portnoff Law Associates, who now could be forced to adapt to the

change. East Stroudsburg Area School District would also have to face and accept

another decrease in the flow of revenue, as Portnoff has proven to be faster at

collecting the debts, legally using the MCTLA, than the Tax Claim Bureau using the

RETSL.

Using the MCTLA instead of the RETSL was the argument that East

Stroudsburg Area School District and Portnoff Law Associates used to justify their

18
PLTA V. East Stroudsburg Area School District No. 226 C.D. Argued 9/13/2006

21

claim of retaining the tax return documents. But the RETSL stipulates in Section

201(a), 72 P.S. § 5860.201(a) that:

In lieu of or in addition to creating a bureau, counties are authorized to
provide by ordinance for the appointment and compensation of such agents,
clerks, collectors and other assistants and employees, either under existing
departments, in private sector entities or otherwise as may be deemed
necessary, for the collection and distribution of taxes under this act. Any
alternative collection method shall be subject to all of the notices, time
frames, enumerated fees and protections for the property owners in this act.19

Essentially this stipulates that any party that collects delinquent taxes other

than the Tax Claim Bureau is required to collect taxes enumerated by the RETSL.

The challenge that Portnoff Law Associates and the school districts that contract

Portnoff face is the stipulation in the RETSL requires Portnoff and the school

districts to turn claims over to the Tax Claim Bureau. The Court decided that the

RETSL doesn’t necessarily override the MCTLA, rather they are to work

concurrently.

The Court indicates that, again, the issue is not whether or not Portnoff or any

third party can collect delinquent tax claims, it’s whether or not the third party may

use the records for their own use, and how they should proceed to collect. The

MCTLA allows for the filing of liens with the Prothonotary, speeding up the process

of collection if the delinquent fails to make payment, as well as creating a very real

and near-future consequence for avoiding payment of delinquent taxes. But how can

Portnoff Law Associates Collect more effectively than the Tax Claim Bureau if they

are forced to operate like the Tax Claim Bureau under the auspices of the RETSL?

It shall be the duty of each receiver or collector of any county, city,
borough, town, township, school district or institution district taxes to make a
19
RETSL, Section 201(a), 72 P.S. § 5860.201(a)

22

return to the bureau on or before the last day of April of each year, but no
earlier than the first day of January of that year. The return shall be type
written on a form provided by or acceptable to the county and shall include a
list of all properties against which taxes were levied, the whole or any part of
which were due and payable in the calendar year immediately preceding and
which remain unpaid, giving the description of each such property as it
appears in the tax duplicate, and the name and address of the owner as it
appears in the tax duplicate, together with the amount of such unpaid taxes,
penalties and interest due to but not including the first day of the month
following the return.20

The Court also decided that the argument that Portnoff and the School

Districts made in their defense was not valid. The School Districts asserted that:

The Trial Court cannot circumvent the School Districts’ choice to
proceed under the MCTLA by requiring the Tax Collectors to make a return
to the Tax Claim Bureau under the RETSL on behalf of the School Districts.
Section 5971t of the Local Tax Collection Law specifically prohibits a tax
collector from making a return to the tax claim bureau if a taxing district
advises that delinquent taxes will be collected by filing liens with the
Prothonotary under the MCTLA. 72 P.S. § 5971t (“no tax collector shall
make any return of taxes providing this act, if the taxing authorities shall
notify such tax collectors in writing that returns shall not be made, but that
delinquent taxes are to be collected by the filing of liens in the office of the
prothonotary.”). The School Districts have given written notice to the tax
collectors that their delinquent taxes will be collected by their Collection
Solicitor under the MCLA. (R. 302a-303a). Therefore, the tax collectors are
statutorily barred from making returns to the Tax Claim Bureau, further
demonstrating that filing returns with the RETSL is not a mandatory
requirement.”21

This demonstrates the School Districts belief that the RETSL and MCTLA

cannot be administered concurrently. As Michelle Portnoff stated, “You can’t have

two collectors collecting the same debt.” (Michelle Portnoff Esq., 4/9/07)

The Court decided that the School District’s argument contained errors that

may or may not have been intentional. The Court found that the reasoning was

20
21

23

flawed and rebutted the School Districts defense of the MCTLA collection practices

already in place by documenting in the Decision,

“We have reviewed the provisions of the MCTLA and find no
provision that repeals § 5860.306 requiring receivers, i.e. taxing districts, or
tax collectors to make returns to the tax claim bureau. Thus, there is no
conflict between the two statutes regarding the requirement for making
returns of delinquent taxes to the tax claim bureau…22

The Court failed to recognize the fundamental differences of Portnoff Law

Associates and the Tax Claim Bureau. The Court believes that the Tax Claim Bureau

uses the RETSL which is more expedient and beneficial to not only the school

districts, but to the county as well as the title insurance companies. But what isn’t

discussed in the case is the burden of delinquent taxes to the school districts

themselves. The only thing highlighted is the burden to the Real Estate industry, and

the additional cost incurred by obtaining a record search through Portnoff Law

Associates.

The Court continued in its rebuttal to the School District argument that they

are not required to turn over records to the Tax Claim Bureau,

“Furthermore, Section 5860.201(a) of the RETSL gives tax claim
bureaus the authority to use other methods of collection, including the
MCTLA, while at the same time requiring compliance with the provisions of
the RETSL. Similarly, the 2004 amendment to the MCTLA also gave tax
claim bureaus authority to use the procedures of that act to collect delinquent
real estate taxes in addition to the procedures set forth in the RETSL.”23

The importance of having access to the public records is evidence as the

testimonial accounts of problems that have been encountered by real estate attorneys,

title searchers, and the general public. In this case, the court decided that the

22
23
ibid

24

convenience to the real estate industry outweighed the interest of the school districts.

Michelle Portnoff commented that, “I think that the title insurance industry will be

open to working something out to solve this problem. You have competing needs

and the vast majority of taxpayers pay on time, but the entire real estate industry is

not in disarray over people who don’t pay their taxes.”24

The Best Interests of The Pennsylvania School Districts:

It is a fact that the majority of revenue collected by the Commonwealth of

Pennsylvania school districts to sustain their daily operating expenses is collected

from the local tax base. According to the Pennsylvania Department of Education,

local taxes represent 93.9 percent of the revenue for school districts! Dawn Schmidt

Esq., former Director of Portnoff Law Associates and the current Deputy

Philadelphia Tax Solicitor responded to that statistic saying, “That is a really

important statistic, because that really differs from state to state. There are many

impacts of relying on local taxes for school operating expenses. First and foremost,

everyone benefits from quality education in society. Nobody says that children are

getting too much. I am idealist and ask, what more can we do for the students?”

When asked if schools should diversify their sources of revenue, Schmidt replied,

“Again, I am an idealist. I believe that school districts should have a lot of power

based on their obligations. Unless we give them the power to even make the choice

to diversify, then how will they know whether or not a change in the current

practices will improve cash flow? It’s not as if I am saying that the school districts

should have sovereign power, because voters ultimately have the power. If we don’t

24
Michelle Portnoff, 4/9/2007

25

like the decisions the school board members are making, then vote them out!

Operating school districts is not a one-size-fits-all scenario.25

When a school district faces a funding crisis, or suddenly faces an increase in

costs, then it is the responsibility of the school boards to formulate solutions. Ideally,

school districts would face challenges without a debt burden. Unfortunately, in some

situations, school districts may face an overwhelming debt load from previous years.

What happens when a school district faces a fiscal challenge without the funds to

remedy the situation? Either the school district will have to cut costs and divert

spending, increase taxes, or go into debt. Dawn Schmidt said, “It’s really important

to know that when a school district faces a crisis, they are empowered to make

choices. Sometimes the choices are not ideal, like selling delinquent tax claims for a

loss, but sometimes a choice that isn’t ideal may be the only realistic option to solve

an immediate challenge. For example, if a school district is owed one million dollars

in delinquent claims, selling those claims for eight hundred thousand dollars may be

better than waiting years to recover the full amount, especially if a school is facing

severe budget shortcomings.”26

It’s been established by the Pennsylvania Legislature that school districts in

the commonwealth need to be afforded flexibility and choices. The RETSL is simply

an addition to the choices that the school districts have. The RETSL in no way

repeals the MCTLA, because if it does then there would be several severe

25
Dawn Schmidt Esq., Phone Interview 4/16/2007
26
ibid

26

repercussions not mentioned before. First, not every county in Pennsylvania has a

Tax Claim Bureau. If the Court rules that the RETSL requires all claims to be

returned to the County Tax Claim Bureau, then what do the school districts do in

Allegheny County, which includes Pittsburgh School District?

According to Dawn Schmidt, “By the courts reasoning in PLTA v. East

Stroudsburg, Allegheny County couldn’t abide by the court’s decision. I just can’t

follow their logic. I don’t see how this ruling helps anyone. Competition helps the

school districts. If you look at the RETSL, some Tax Claim Bureaus have too much

flexibility, but the RETSL doesn’t mandate efficiency. It is not fair that the School

District is mandated to return claims to the Tax Claim Bureau where they have

absolutely no influence. “27

A 2005 article in the Pittsburgh Tribune-Review titled, Push is on for county

tax claim bureau stated,

Allegheny County Controller Mark Patrick Flaherty is pushing a plan
to consolidate collection of overdue property tax debts into one countywide
tax claim bureau. Melding debt collection now carried out by 174 taxing
bodies into one agency would speed collection of debts, increase efficiency
and get properties back on tax rolls more rapidly, Flaherty said. "The whole
process would just be a lot quicker in terms of getting liens erased from
properties," he said. Flaherty's plan would have no effect on local tax
collectors' responsibility to collect current taxes.”28

County Controller Mark Patrick Flaherty is not entirely correct in his

assessment of a County Tax Claim Bureau. Ideally the Tax Claim Bureau would

speed up collection, however it is not the reality across the state. The writer of the

article was able to solicit an opinion from a local School Board President, who

27
28
Glenn May: Push is On for County Tax Claim Bureau, Pittsburgh Tribune-Review, 11/14/2005

27

shared his opinion that a Tax Claim Bureau is not acting in the best interest of the

School District. His argument confirms the opinion that only a local school district

knows their situation best.

“Ed Wielgus, president of the North Hills School Board, said
centralized debt collection might be a solution in search of a problem. "I've
always been amazed that the county and the state know what's best for the
school districts. Local tax officials can be more responsive to cash-strapped
residents, "They can go to their local person or go to their school board and
get help.” “North Hills, for example, puts properties up for sale only when
the owner refuses all help and cuts off communication with the district,” he
said.

Jake Haulk, president of the Allegheny Institute for Public Policy,
said there appears to be a rush in Allegheny County to consolidate everything
in government without considering the merits of doing so.

If local governing officials and voters are happy with local control of
debt collection, "there's no need to hand that off to somebody down on Grant
Street," he said.

County Chief Executive Dan Onorato, a Democrat, said he supports
Flaherty's idea. So does state Sen. Jim Ferlo, D-Highland Park.

"It's definitely something I could wholeheartedly embrace," said
Ferlo, minority chairman of the Senate Local Government Committee, which
would likely review such a plan.

Establishing the bureau would require a change in state law. State law
now allows all counties except Allegheny to have centralized tax claims
bureaus, and Ferlo said it would be relatively simple to add Allegheny
County to the list.

Westmoreland County is among the counties that uses a unified
claims bureau. It has collected all debts for the county’s 65 taxing
jurisdictions since the late 1970s and the system has worked well, said
Westmoreland County Tax Office director Yvonne Hayes.”29

Pennsylvania Law specifically spells out the choices a School District has to

solve their delinquent tax problem. They can contract a private collector or use a Tax

Claim Bureau, because in reality, the Tax Claim Bureau isn’t always the best option.
29
Glenn May: Push is On for County Tax Claim Bureau, Pittsburgh Tribune-Review, 11/14/2005

28

To be fair, in some situations a private collector may not be the best option. But it is

more important to note that not only does the Tax Claim Bureau take a 5% fee from

the school district on the delinquent liens, but the County collects without any school

district oversight. According to Michelle Portnoff, in Pennsylvania that 5% fee was

an estimated $32 million last year. “Thirty-two million dollars could have gone to

teachers and textbooks.”30

A benefit of contracting Portnoff Law Associates, or any third party collector

is the school district’s ability to regulate the process and have controls. Local school

districts know their citizens and know the reality of their situation. Like Attorney

Dawn Schmidt said, there is never one school district in the same position as another.

School Districts in the Commonwealth of Pennsylvania range from very rural to

extremely urban. Philadelphia schools face different challenges than East

Stroudsburg. Revenue in Potter County schools is spent differently than Montgomery

County Schools. Two school districts in Montgomery County may have different tax

bases and different obligations. Of course there is not a simple solution to the

differences between PLTA and East Stroudsburg Area School District. It is

important to note that if a solution is not found, students will suffer.

The court deciding PLTA v. East Stroudsburg Area School District chose to

accept the argument that the availability of information to the real estate industry and

the general public outweigh the best interest of the school district, and the actual

intent of the MCTAL altogether. The Court’s recent ruling does nothing to alleviate

the burden of delinquent taxes on the School District, rather it would simply mandate

one collector per county for all delinquent claims within that county. In this scenario,
30
Michelle Portnoff, Phone Interview 4/9/07

29

how does a school district exercise control over their collection once the claims have

become delinquent? In simple terms, they have absolutely no control. Schmidt

elaborated the value of the MCTLA saying, “The MCTLA allows school districts to

sell their debt, pass the collection on to a third party, or use the County Tax Claim

Bureau. How can a school district make a choice when they are mandated by a court

to use the Tax Claim Bureau? The school districts have an incredible responsibility

to educate our children, and a result of mandating the use of a Tax Claim Bureau to

collect delinquent claims would limit the school district’s ability to choose what is

best for our children.”31

Conclusion:

When the Court decided PLTA v. East Stroudsburg Area School District it

failed to recognize the implications, consequences, and scope of their decision. The

Court affirmed that the concurrence of the RETSL and MCTLA exist, however the

logic of the decision does not allow for that affirmation to realistically apply. Both

laws fundamentally allow for school districts in the Commonwealth of Pennsylvania

to choose the delinquent tax claim collector for themselves and their tax-paying

citizens. The court’s decision contradicts itself and actual law.

In part, the debate is over money. Who has the right to the taxpayer’s money?

Some County Tax Claim Bureaus feel that it is their role to collect all of the

delinquent tax claims in their jurisdiction. Other Tax Claim Bureaus do not object to

the burden of tax collection to be shared. Some Tax Claim Bureaus are

uncooperative to the extent that they won’t even recognize a third party collector to
31

30

someone who asks for that kind of information. Two problems in this unique conflict

are the division of public records, and the division of labor rights.

State law gives the right to taxing districts in the Commonwealth to contract

third party delinquent tax collection, again, the court and most of the parties involved

do not disagree with this fact. All the parties in this conflict agree that the issue is

much deeper than the practice of hiring a private tax collector. Is there a

compromise? Some Tax Claim Bureaus want to collect all of the delinquent claims.

A benefit would be a significant increase in county revenue. Some would like to see

all of the claims in the hands of private collectors, rapidly collecting the district

delinquent taxes. But there is a middle ground. There can be a sharing of the

delinquent claims that allows for easy title searches, as well as expedient collection

options at the ready for school districts and taxing districts. Michelle Portnoff

believes that the answer is computerized record keeping. PLTA believes that that

answer is computerized record searches.

Can a statewide, online, record repository be the answer? If that is the

answer, then who will foot the bill? Both the Pennsylvania Land Title Association

and Portnoff Law Associates are now seeking a legislative remedy to the problem.

The PLTA realizes that it is unrealistic to go into every taxing district and ask the

courts to issue mandamus, ordering the records returned to the Tax Claim Bureaus.

Portnoff realizes that in the future, a conflict in legislation will jeopardize private tax

collection.

Can the legislature find a way to combine the MCTLA and RETSL into

balanced legislation? The legislature must realize that the real estate industry is

31

burdened by the delinquent tax claim collection inconsistencies just as they must

realize that the impact of a legislative remedy can benefit every Pennsylvania public

school student. The legislature must find a way to protect private businesses, every

county’s vitality, and the secured prosperity of all Pennsylvania school districts. At

the center of this conflict is a demand for careful consideration to everyone involved

and connected to this issue.

A compromise may not satisfy everyone, but a compromise will guarantee that

precious Pennsylvanian jobs aren’t lost, students are competitively educated, and

Pennsylvania counties aren’t dependent on delinquent tax collection fees and interest.

Without compromise, Pennsylvania schools will face an uncertain future. One solution

to this conflict is a state funded information-sharing network allowing for the secured

storage of public information. In this day and age, the ability to share essential

information is easy to implement. As easy as implementation may be, the cost is indeed

a factor. It is a state function to secure welfare of the students, and an investment in

compromise is an investment in the future. This change requires smart programming, an

environment of cooperation, and the intent to honestly serve all Pennsylvanians.

Gordon Rhoads

32

Bibliography:

PLTA v. East Stroudsburg Area School District No. 226 C.D. Argued 9/13/2006

City of Allentown v Kauth No. 2060 C.D. 2004 No. 2061 C.D. 2005

Jane Roach Esq., Attorney for Pennsylvania Land Title Association & Member of
the Board of Directors of the Pennsylvania Bar Institute, Phone Interview on
3/30/2007

Michelle Portnoff Esq., President of Portnoff Law Associates, Phone Interview,
4/9/07

Sandy Dixon Esq., Chairman of the PLTA Legislative and Judicial Committee,
Phone Interview 3/28/2007

Dawn Schmidt Esq., Former Director of Portnoff Law Associates & Deputy City Solicitor
for the Philadelphia Major Tax Enforcement Division, Phone Interview 4/16/2007

Rupert, Edward: AAP Journal Assessors Association of Pennsylvania, Issue 5
Volume 2 Spring 2004

Steve Levin: A Dream Foreclosed: Small Mistakes Giant Consequences, Pittsburgh Post-
Gazette, 6/7/04: http://www.post-gazette.com/pg/04159/328289.stm accessed on 3/31/2007

Glenn May: Push is On for County Tax Claim Bureau, Pittsburgh Tribune-Review,
11/14/05: http://www.pittsburghlive.com/x/pittsburghtrib/s_394262.html accessed on 4/2/07


Findlaw.com, 10/1/2000, Accessed on 3/29/2007:
http://library.findlaw.com/2000/Oct/1/128768.html, Saul Ewing LLP

The Pennsylvania Real Estate Tax Sale Law Act 542 of 1947, P.L. 1368; 72 P.S. §
5860.101

The Pennsylvania Municipal Claims & Tax Liens Act (Municipal Claim and Tax
Lien Law) Act 153 of 1923, P.L. 207; 53 P.S. § 7101

Sample letter signed by Alan B. Portnoff Esq., acquired from firm employee orientation, not
dated

http://www.mapwatch.com/multi-maps/full/pennsylvania-county-map.gif (accessed
4/18/07) sources of revenue

http://www.pde.state.pa.us/schoolfinance101/lib/schoolfinance101/souceoffnding.gif
(accessed 4/18/07) statewide sources of school funding

33

http://www.pde.state.pa.us/schoolfinance101/lib/schoolfinance101/localtaxes.gif
(accessed 4/18/07) local tax chart

http://www.pde.state.pa.us/schoolfinance101/lib/schoolfinance101/localbysource.gif
(accessed 4/18/07) local sources of school revenue chart

Morris, Christopher W. The Social Contract Theorists: Oxford England, 1999

Fruchtman, Jack Jr. Thomas Pain Apostle of Freedom: New York NY, 1994

Eckler, Peter. The Complete Political Works of Thomas Paine: New York NY, 1917

34

Appendix:

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
The Pennsylvania Land Title :
Association and Fidelity Home :
Abstract, Inc., Individually and as :
Representatives of All Other Individuals :
and Entities Similarly Situated :
:
v. :
:
East Stroudsburg Area School District, :
Dr. Rachel R. Heath, Superintendent of :
East Stroudsburg Area School District, :
Pleasant Valley School District, :
Dr. Frank A. Pullo, Superintendent :
Pleasant Valley School District, :
June O'Neill, Chestnuthill Township :
Tax Collector, Helen Mackes, :
Eldred Township Tax Collector, Carolyn :
Meinhart, Polk Township Tax Collector, :
Jean Altemose, Ross Township Tax :
Collector, Alberta Tallada, East :
Stroudsburg Borough Tax Collector, :
Dawn Arnst, Middle Smithfield Tax :
Collector, Sharon Gerberich, :
Smithfield Township Tax Collector, :
Kathy Mosher Kroll, Price Township :
Tax Collector :
:
Appeal of: East Stroudsburg Area :
School District, Pleasant Valley School :
District, Dr. Rachel R. Heath and : No. 226 C.D. 2006
Dr. Frank A. Pullo : Argued: September 13, 2006
BEFORE: HONORABLE JAMES GARDNER COLINS, President Judge
HONORABLE BERNARD L. McGINLEY, Judge
HONORABLE DORIS A. SMITH-RIBNER, Judge
HONORABLE ROCHELLE S. FRIEDMAN, Judge
HONORABLE BONNIE BRIGANCE LEADBETTER, Judge
HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE ROBERT SIMPSON, Judge
2
OPINION BY JUDGE McGINLEY FILED: November 22, 2006
The East Stroudsburg School District (East Stroudsburg) and Pleasant
Valley School District (Pleasant Valley) (collectively, the School Districts)1 appeal
from an order of the Court of Common Pleas of Monroe County (trial court) that
granted the Pennsylvania Land Title Association’s (PLTA) and Fidelity Home
Abstract, Inc.’s (Fidelity) motion for peremptory judgment and issued a writ of
mandamus against the School Districts.
On November 21, 2005, PLTA and Fidelity alleged in its class action2
Complaint:
1. . . .[PLTA] . . . is a duly organized Pennsylvania nonstock,
non-profit corporation in good standing, whose
stated mission is ‘the advancement of the science of
evidencing and insuring title to real property and the
education of its members through various seminars and
other educational functions’ . . . .
2. . . . Fidelity . . . is a duly organized Pennsylvania
corporation in good standing engaged in the business of
title examination, real estate settlement services and the
sale of title insurance . . . .
1 This is a civil class action in mandamus against the School Districts, the School
Districts’ Superintendents and eight tax collectors for a number of townships and a borough
located within the School Districts’ geographic boundaries in Monroe County.
2 PLTA and Fidelity also commenced this action on behalf of a class defined as:
[A]ll individuals and entities, including but not limited to sole
proprietorships, partnerships, corporations, limited liability
companies and associations whose business purposes and activities
require that they have access to accurate public records and to tax

35

Certifications from the public records of the Monroe County Tax
Claim Bureau and the Monroe County Prothonotary relating to
property taxes for properties located in the School Districts.
Class Action Complaint In Mandamus (Complaint), November 21, 2005, Paragraph 36 at 10;
Reproduced Record (R.R.) at 16a.
3
3. . . . East Stroudsburg . . . is a school district of the
Second Class and a taxing district, located in Monroe and
Pike Counties . . . with its administrative offices in East
Stroudsburg . . . .
....
5. . . . Pleasant Valley . . . is a school district of the Third
Class and a taxing district located in Monroe County . . .
with its administrative offices in Brodheadsville, Monroe
County . . . .
....
16. . . . East Stroudsburg . . . and Pleasant Valley . . . are
Monroe County taxing districts within the meaning of the
School Code, the Local Tax Collection Act, the General
Assessment Act and the Real Estate Tax Sales Act.
Count I
17. The Monroe County Tax Claim Bureau, hereinafter
“the Bureau” is a county office, established by the Real
Estate Tax Sales Act, supervised by the Monroe County
Commissioners and charged with various real estate tax
collection obligations under the Real Estate Tax Sales
Act.
....
19. The Tax Collectors and or their predecessors in office
have not made any returns on any school taxes for the
East Stroudsburg School District to the Bureau for the tax
years 2002, 2003 and 2004. (emphasis added).
have not made any returns on any school taxes for the
Pleasant Valley School District to the Bureau for the tax
years 2002, 2003 and 2004. (emphasis added).
have instead, apparently at the direction of the School
Districts, made returns to or relinquished their books, tax
duplicates, data and or records solely to the School
Districts. (emphasis added).
22. The School Districts have pursued the collection of
and have collected delinquent taxes directly, in part
4
through the filing of municipal liens in the Office of the
Prothonotary of Monroe County. (emphasis added).
23. Plaintiffs [PLTA and Fidelity] believes [sic] and
therefore avers [sic] that the Tax Collectors and the
School Districts intend to continue the practice of
depriving the Bureau of any returns, tax duplicates,
records, data or books of school taxes, instead placing
any returns and the books, tax duplicates and or records
of the Tax Collectors with the School Districts.
24. The Bureau is unable to provide Plaintiff [PLTA and
Fidelity], the Class and or public with Certifications or
with any access to the returns, data, tax duplicates, books
and records of school taxes for the real estate located
within the geographic boundaries of the School Districts,
for the tax years described above, as the Bureau has no
control of or access to any returns of any school taxes
from the Tax Collectors, or to the books, tax duplicates,
data and records of the collection of such school taxes by
the Tax Collectors. (footnote omitted).
25. Returns and public records for all other taxing
districts in Monroe County are duly returned to and
available to the public at the Bureau.
....
29. Counsel to Plaintiffs [PLTA and Fidelity] has
requested that the Tax Collectors make returns to the
Bureau and they have failed and refused to do so.

36

(emphasis added).
requested that the School Districts return any returns,
books, tax duplicates, data and records to the Bureau and
they have failed and refused to do so. (emphasis added).
requested that the School Districts relinquish all direct
payments of delinquent taxes to the Bureau and they have
failed to do so. (emphasis added).
32. The failure and refusal of the Tax Collectors and the
School Districts to make returns and to relinquish the
5
returns, books, duplicates, data and records of the Tax
Collectors and receipts of direct payments of delinquent
taxes to the Bureau warrants Mandamus relief . . . .
(emphasis added).
33. Plaintiffs [PLTA and Fidelity] have an immediate and
complete legal right to the relief requested herein and
have a beneficial interest in this matter distinct from the
general public interest . . . .
34. The ability of Plaintiffs [PLTA and Fidelity] and the
Class reliably to search, to examine and to insure titles to
real estate in the School Districts has been substantially
impaired by the events, facts and circumstances set out
above. (emphasis added).
35. Plaintiffs [PLTA and Fidelity] have no adequate
remedy at law in that a suit for damages would not
remedy the deprivation of access to public records of tax
claims and payments. (emphasis added).
Complaint, Paragraphs 1-3, 5, 16-17, 19-25, and 29-35 at 2-8; R.R. at 8a-14a.
Also, on November 21, 2005, PLTA and Fidelity sought a peremptory
judgment on its mandamus claims and alleged:
4. Plaintiffs [PLTA and Fidelity] are prepared to prove
through stipulations and through the testimony of
appropriate witnesses that there are no genuine issues of
material fact in dispute. (emphasis added).
5. Where there are no issues of material fact in dispute, a
party requesting mandamus relief is entitled to
peremptory judgment prior to the filing of a responsive
pleading by the Defendants [the School Districts].
6. Plaintiffs [PLTA and Fidelity] request an evidentiary
hearing on their Motion for Peremptory Judgment.
(emphasis added).
6
7. The resolution of peremptory judgment prior to
certification of the proposed class is warranted in that:
....
c. The issuance of Peremptory Judgment prior to class
certification would result in a judgment that binds the
individual Plaintiffs [PLTA and Fidelity] and the
Defendants [the School Districts] and not the Class;
given the nature of the mandamus relief requested in this
action, neither the Class nor the Defendants [the School
Districts] would suffer harm if the mandamus relief
issued in the form of a peremptory judgment does not
bind the class.
Motion For Peremptory Judgment On Mandamus Claims, November 21, 2005,
Paragraphs 4-7(c) at 1; R.R. at 38a.
The trial court recounted the facts based upon the testimony3 elicited
at the December 7, 2005, hearing:
The facts of this case are as follows: Briefly since 2003
the Tax Collectors, following the instructions of the
School Districts, have not made returns of delinquent
school taxes for tax years 2002, 2003 and 2004 to the
Monroe County Tax Claim Bureau . . . . Instead, the
School Districts have contracted with Portnoff Law
Associates, Ltd (hereinafter referred to as “Portnoff”), to
3 The following parties testified: 1) Greg Christine (Christine), director of the Monroe
County Tax Claim Bureau; 2) Dr. Rachael Heath (Heath), Superintendent of the East
Stroudsburg School District; 3) Kathy Kroll Mosher (Mosher), tax collector for Price Township;

37

4) Dr. Frank Pullo (Pullo), Superintendent of the Pleasant Valley School District; 5) Donna Les
(Les), business manager for Pleasant Valley School District; 6) Marie Guidry (Guidry), business
manager for East Stroudsburg; 7) Robin Rodenhauser (Rodenhauser), Chief Deputy
Prothonotary for Monroe County; 8) Helen Decidue (Decidue), Recorder of Deeds for Monroe
County; 9) Marshall E. Anders (Anders), attorney for Integrity Abstract; 10) Lori Cerato
(Cerato), attorney and licensed insurance agent for Lawyers Title; 11) Charles Molinari
(Molinari), title agent for Universal Abstract; 12) Craig Roberts (Roberts), underwriter for
Lawyers Title; and 13) Michelle Portnoff (Portnoff), principal partner for Portnoff Law
Associates, Ltd.
7
act as their solicitor for purposes of collecting delinquent
taxes using the provisions of the Municipal Claims and
Tax Lien Act. As a result, the Bureau has no records of
paid or delinquent school taxes for properties located
within the two School Districts for the tax years 2002,
2003 and 2004. The School Districts are able to provide
information regarding delinquent school tax records to
the general public upon request; however, the
information is not readily available for viewing by the
general public, nor is the information updated after the
delinquent taxes are forwarded to Portnoff for collection.
Consequently, title searchers, title insurance companies,
mortgage companies, banks, attorneys and the general
public cannot obtain this information from the Bureau or
the School Districts; instead, they must contact Portnoff.
Anyone requesting information from Portnoff can receive
a verbal report on the status of such taxes free of charge;
however, if a written report is requested, the cost is
$25.00 to $50.00 depending on whether it is an expedited
request. When requesting a written report from Portnoff,
it takes a minimum of five business days to receive the
information for a regular request, and it takes two
business days to receive the information on an expedited
request. All responses to requests are sent by fax.
Although identified as certifications, the reports prepared
by Portnoff are not signed certifications. This same
information, if it were available at the Bureau, could be
viewed by the requester either in printed form by looking
at the hard copy file or by using the computer terminals
that are available for public use free of charge. If a tax
lien certificate is requested from the Bureau, the
requester would receive an “official” certification of the
status of the taxes, whether paid or unpaid, on a specific
parcel of real estate within a matter of minutes. The cost
of this official tax lien certificate is $10.00.
Real estate attorneys and title agents who handle real
estate matters regarding properties located in the School
Districts have suffered monetary losses due to the lack of
or inaccuracy of information regarding the status of the
school taxes. They have also experienced delays in
receiving information from tax records which previously
had been instantly available at the Bureau. Confusion
8
has been created for delinquent taxpayers over who they
should make delinquent tax payments to – the Bureau or
Portnoff. Taxpayers have also experienced problems
obtaining credit because the tax liens filed by Portnoff in
the Monroe County Prothonotary’s Office have not been
satisfied even though they have been paid. (footnote
omitted).
Opinion of the Trial Court, February 2, 2006, at 2-4.
On February 2, 2006, the trial court granted the motion for
peremptory judgment and issued a writ of mandamus: 1) that the School Districts
and tax collectors are to make future annual returns to the Bureau; 2) that the
School Districts are to provide to the Bureau all of the School Districts’ books and
records for tax years 2002, 2003, and 2004; 3) that the School Districts also are to
provide a detailed disclosure to the Bureau of the status of all real estate taxes for
the applicable tax years; 4) that the School Districts and tax collectors are to make
payments for the delinquent taxes shown on the returns only to the Bureau; 5) that
the School Districts are to relinquish all future payments for delinquent taxes to the

38

Bureau and to provide to the Bureau detailed property descriptions for which the
payments were made; 6) that the School Districts are to file a satisfaction of liens
for payments received on municipal liens; and 7) that the School Districts are to
provide full tax lien payoff information in writing, at no charge, within five
business days of any written request. See Order of the Trial Court, February 2,
2006, at 1-2.
I. Whether The Trial Court Erred As A Matter Of Law When It Determined
That Section 306(a) Of The “Real Estate Tax Sale Law” (RETSL)4 Was
Mandatory?
4 Act of July 7, 1947, P.L., as amended, 72 P.S. §§ 5860.306(a).
9
Initially, the School Districts assert5 that statutorily they chose to
collect delinquent taxes pursuant to the Municipal Claims and Tax Liens Act
(MCTLA)6, 53 P.S. §§ 7101-7505 and, as a result, were not required to comply
with Section 306(a) of the RETSL, 72 P.S. §5860.306(a). The School Districts
assert that under Pennsylvania law a taxing district may collect delinquent school
taxes under either of the following; the MCTLA, the RETSL, or the Local Tax
Collection Law (LTCL) .7
Section 201(a) of the RETSL, 72 P.S. § 5860.201(a), provides:
In lieu of or in addition to creating a bureau, counties are
authorized to provide by ordinance for the appointment
and compensation of such agents, clerks, collectors and
other assistants and employes, either under existing
departments, in private sector entities or otherwise as
may be deemed necessary, for the collection and
distribution of taxes under this act. Any alternative
collection method shall be subject to all of the notices,
time frames, enumerated fees and protections for the
property owners contained in this act . . . . (emphasis
added).
Section 306(a) of the RETSL, 72 P.S. § 5860.306(a), provides:
5 This Court’s review is limited to a determination of whether the trial court committed
an abuse of discretion, an error of law, or rendered a decision which lacked supporting evidence.
Bell v. Berks County Tax Claim Bureau, 832 A.2d 587, 590 (Pa. Cmwlth. 2003). Also,
“[p]eremptory judgment in a mandamus action may be entered only where no genuine issue of
material fact exists, and the case is free and clear from doubt.” Council of the City of
Philadelphia v. Street, 856 A.2d 893, 896 (Pa. Cmwlth. 2004), citing Forward Township Sanitary
Sewage Authority v. Township of Forward, 654 A.2d 170 (Pa. Cmwlth. 1998).
6 Act of May 16, 1923, P.L. 207, as amended, 53 P.S. §§ 7101-7105.
7 Act of May 25, 1945, P.L., as amended, 72 P.S. §§5511.1-5511.42.
10
It shall be the duty of each receiver or collector of any
county, city, borough, town, township, school district or
institution district taxes to make a return to the bureau on
or before the last day of April of each year, but no earlier
than the first day of January of that year. The return shall
be type written on a form provided by or acceptable to
the county and shall include a list of all properties against
which taxes were levied, the whole or any part of which
were due and payable in the calendar year immediately
preceding and which remain unpaid, giving the
description of each such property as it appears in the tax
duplicate, and the name and address of the owner as it
appears in the tax duplicate, together with the amount of
such unpaid taxes, penalties and interest due to but not
including the first day of the month following the return .
. . . (emphasis added).
After review of the applicable statutory authority, this Court rejects
the School Districts’ argument8, and concurs in the trial court’s analysis that
8 This Court notes that the School Districts committed the following errors, whether intentional
or unintentional during argument. Specifically, the School Districts argue:
The Trial Court cannot circumvent the School Districts’ choice to
proceed under the MCTLA by requiring the Tax Collectors to
make a return to the Tax Claim Bureau under the RETSL on behalf
of the School Districts. Section 5971t of the Local Tax Collection
Law specifically prohibits a tax collector from making a return to
the tax claim bureau if a taxing district advises that delinquent
taxes will be collected by filing liens with the Prothonotary under
the MCTLA. 72 P.S. § 5971t (“No tax collector shall make any
return of taxes provided in this act, if the taxing authorities shall

39

notify such tax collectors in writing that returns shall not be made,
but that delinquent taxes are to be collected by the filing of liens in
the office of the prothonotary.”). The School Districts have given
written notice to the tax collectors that their delinquent taxes will
be collected by their Collection Solicitor under the MCTLA. (R.
302a-303a). Therefore, the tax collectors are statutorily barred
from making returns to the Tax Claim Bureau, further
demonstrating that filing returns with the RETSL is not a
mandatory requirement.
(Footnote continued on next page…)
11
Section 306(a) of the RETSL, 72 P.S. § 5860.306(a) requires the School Districts
“to make returns to the tax bureau” of all delinquent taxes:
We have reviewed the provisions of the MCTLA and
find no provision that repeals § 5860.306 requiring
receivers, i.e. taxing districts, or tax collectors to make
returns to the tax claim bureau. Thus, there is no conflict
between the two statutes regarding the requirement for
making returns of delinquent taxes to the tax claim
bureau. Moreover, § 5511.21(b) of the LTCL, which
authorizes a taxing district to recover unpaid taxes after a
return is made to a bureau, clearly recognizes the
requirement of § 5860.306. The Court in Wallingford
[Swarthmore School District v. Kuyumjian, 625 A.2d
1305 (Pa. Cmwlth. 1993)] further stated that the authority
of a taxing district to recover unpaid taxes after a return
has been made to a bureau has been the long standing law
of this Commonwealth. Wallingford, supra at 1307,
citing Tremont Township School District v. Western
Anthracite Coal Co., 73 A.2d 670 (1950).
Furthermore, Section 5860.201(a) of the RETSL gives
tax claim bureaus the authority to use other methods of
collection, including the MCTLA, while at the same time
requiring compliance with the provisions of RETSL.
Similarly, the 2004 amendment to the MCTLA also gave
tax claim bureaus authority to use the procedures of that
act to collect delinquent real estate taxes in addition to
the procedures set forth in the RETSL. 53 P.S. Sec
7193.5. Thus, if a tax claim bureau, as a taxing authority,
is authorized to use the provisions of the MCTLA to
(continued…)
Brief for Appellants at 17.
First, Section 21t of the Act of May 29, 1931, P.L. 280 (Act), 72 P.S. §5971t, was
repealed and has no application to the RETSL: (“This section was repealed insofar as taxing
districts coming within provisions of and operating under sections 5860.101-5860.803 of this
title, by act 1947, July 7, P.L. 1368, § 801, section 5860.801 of this title”). Second, Section 21t
of the Act was not part of the LTCL which is codified at 72 P.S. §§ 5511.1-5511.42.
12
collect delinquent taxes yet, is still required to comply
with the provisions of the RETSL (72 P.S. Sec
5860.201(a)), then it stands to reason that other taxing
authorities, like the School Districts, who have opted to
use the MCTLA provisions, would likewise be required
to comply with the RETSL provisions. Although not
specifically stated in the statutes, we believe this
compliance requirement applies to the specific provision
for making returns to the tax claim bureau. It should also
be noted that the Commonwealth Court in [City of
Allentown v.] Kauth [, 874 A.2d 164 (Pa. Cmwlth.
2005)] held that “the two statutes are very similar and
operate concurrently with one another . . .”. Kauth,
supra, at 169. Likewise, we find that the MCTLA and
RETSL statutes are not mutually exclusive, but instead
are very similar and their provisions are designed to
operate in conjunction with one another. Accordingly,
we believe that it is possible to give effect to the
provisions of both the MCTLA and the RETSL;
therefore, the provisions of these two statutory collection
schemes are not irreconcilable.
....

40

The importance of having access to the public records is
evidenced by the testimonial accounts of problems that
have been encountered by real estate attorneys, title
insurance agents and the general public . . . .
....
The dominant purpose of the RETSL is to provide
speedier and more efficient procedures for enforcing tax
liens and to improve the quality of titles obtained at a tax
sale. Povlow [v. Brown, 315 A. 2d 375 (Pa. Cmwlth.
1974)], supra. It is clear that the ability to obtain
accurate and complete information has been and will
continue to negatively impact the quality of titles to real
estate as long as the public records for the delinquent
school taxes continue to be diverted away from the
Bureau. Since the statutes are very similar and work
concurrently, the choice to use the procedures of the
MCTLA to collect delinquent school taxes does not
relieve the School Districts or Tax Collectors of their
duty to make returns to the Monroe County Tax claim
Bureau as required § 5860.306 of the RETSL.
(emphasis added and in original).
13
Opinion of the Trial Court at 24-26 and 31.
II. Whether The Trial Court Erred When It Determined That The Right To
Know Act9 Was Applicable?
The School Districts next contend that the Right to Know Act is not
applicable because the Bureau is not solely authorized as the repository for public
records of delinquent taxes or issuer of official tax certifications. Specifically, the
School Districts assert they complied with all laws addressing the availability of
public records.
Section 1 of the Right to Know Act, 65 P.S. § 66.1, defines the term
“agency” as “any political subdivision of the Commonwealth . . . or municipal
authority or similar organization created by or pursuant to a statute which declares
in substance that such organization performs or has for its purpose the performance
of an essential governmental function.”
Also, Section 1 of the Right to Know Act defines the term “public
record” as “[a]ny account, voucher or contract dealing with the receipt or
disbursement of funds by an agency . . . .”
Last, Section 2 of the Right to Know Act, 65 P.S. § 66.2, provides:
(a) General rule. Unless otherwise provided by law, a
public record shall be accessible for inspection and
duplication by a requester in accordance with this act. A
public record shall be provided to a requester in the
medium requested if the public record exists in that
9 Act of June 21, 1957, P.L. 390, as amended, 65 P.S. §§ 66.1-66.9.
14
medium; otherwise, it shall be provided in the medium in
which it exists. Public records shall be available for
access during the regular business hours of an agency.
Nothing in this act shall provide for access to a record
which is not a public record.
Here, it is undisputed that the School Districts, the tax collectors and
the Bureau are “public” agencies and that the records of real estate tax payments
by property owners are “public records” as defined by Section 1 of the Right to
Know Act, 65 P.S. § 66.1. The query before this Court is whether the School
Districts complied with Section 2 of the Right to Know Act, 65 P.S. § 66.2 under
the challenged procedure for the collection of delinquent taxes so that the tax
records are readily available to the public upon request.
This Court again agrees with the observations of the trial court that:
Representatives of . . . East Stroudsburg . . . testified that
information regarding school taxes is available, upon
request, at the [East Stroudsburg’s] office. The
testimony reveals that the information is looked up on the
computer system by a school employee and the requester
is given an oral report; or if requested, a printed form will
be provided which shows all records paid or unpaid since
1993; however, the report will not be signed. The
testimony further revealed that members of the general
public cannot sit down at a computer themselves and
access the tax records on the school’s database. The

41

“The Consequences of Conflicting Delinquent Property Tax Collection Laws in The Commonwealth of Pennsylvania.”

“The Consequences of Conflicting Delinquent Property Tax Collection Laws in The Commonwealth of Pennsylvania.”

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“The Consequences of Conflicting Delinquent Property Tax Collection Laws in The Commonwealth of Pennsylvania.”