Lehigh Valley lawmaker looks to close tax collectors’ fraud loophole

HARRISBURG — It’s a crime of opportunity committed against Pennsylvania taxpayers time and time again.

• 1990: Former Bath tax collector William O. Jandrasitz and his wife, JoAnn F. Jandrasitz, are sentenced in Northampton County Court to probation for stealing $236,714 in borough and school tax receipts.

• 2013: Former Mohnton tax collector Jodie Mae Keller gets probation after pleading guilty in Berks County Court to stealing $19,000 in borough tax payments to pay credit card bills, groceries and a car loan.

• 2014: Former tax collector Robert H. Henry is sentenced to up to two years in prison in Delaware County Court for stealing a combined $1.3 million from Aldan Borough and the William Penn School District.

A Google search, “Pennsylvania tax collector charged with fraud,” brings up numerous other examples following the same pattern: Tax collectors take advantage of loopholes in state law to cash or deposit into their own personal accounts other people’s real estate, per capita, income and other taxes. The loopholes allow residents and business owners to make checks and money orders to the tax collectors themselves — instead of to the government entity they serve.

“I spend a good amount of my time investigating and uncovering fraud, and it’s been heartbreaking for me personally to look into it,” Dauphin County Treasurer Janis Creason said. “It is so cut and dry it hardly requires description. Someone who is paying real estate taxes should not be making payments directly to a private individual.”

But in Harrisburg nothing is cut and dry.

In October, the Legislature failed to close the check-cashing loophole when the Senate stripped from a tax collection bill an amendment proffered by Rep. Ryan Mackenzie, R-Lehigh. His amendment, which unanimously passed the House, would have required tax collectors and government entities to use language on tax bills directing citizens to make checks payable to the municipality — and not to individual tax collectors.

Mackenzie said he doesn’t know why the Senate refused to vote on his amendment, but he’s trying again this year. House Bill 160 goes further than his old amendment in seeking to stop fraud committed by elected and appointed tax officials.

Mackenzie’s bill, which last week passed the House Local Government Committee, would prohibit checks collected by a tax collector from being made payable in the name of an individual tax collector. His bill also would require municipalities or tax collectors to send citizens and businesses tax bills that instruct them to make checks payable to a generic tax office, title or position.

The bill would require tax collectors to open bank accounts in the municipality’s name, not in their own. No checks could be deposited bearing the tax collector’s surname. A deputy tax collector would have access to the new bank accounts in case the main tax collector died or became incapacitated.

Finally, the bill would require tax collectors to refund overpayments and to create a paper trail of overpayments and refunds in annual audits of the tax collectors that boroughs and townships are supposed to perform.

“It is common-sense stuff,” Mackenzie said.

The bill’s proposed changes are long overdue to improve the transparency and stop fraud in local government, said Rep. Bob Freeman, D-Northampton, minority chairman of the Local Government Committee.

 

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