Scranton Officials Demand Lackawanna County Reduce Overdue Tax Lawyer Fees | New
Scranton officials are calling on Lackawanna County to renegotiate an intergovernmental agreement to reduce attorney fees charged to defaulting city taxpayers they deem excessive.
A 2016 county ordinance authorizing the 10% “attorney privilege fee” charged by attorney Joseph Joyce, of Joyce, Carmody & Moran, is referenced in the 2020 agreement that shifted the collection of taxes to suffering at the county tax claims office. City officials argue the county has not clearly disclosed the charges – an issue county officials vehemently deny.
Legal fees are separate from the 5% commission the city pays the office for its share of overdue taxes collected.
County and city officials say they hope to resolve the dispute that threatened to scuttle the deal – a deal the two sides agree has been a financial boon for the city.
Last week, the office handed over $ 2.8 million to the city, of which about $ 2.4 million was from overdue taxes owed for 2019 and 2020, which were subject to municipal liens filed by Joyce. The remaining $ 400,000 is proceeds from past overdue tax years.
The deal is also a lucrative deal for Joyce, the attorney for the tax claims office. Her company made $ 287,626 in April and May – more than two and a half times the $ 104,537 she was paid for legal work performed for the office for 2020, according to county records.
While city officials say they are satisfied with the collection of overdue taxes, they are troubled by attorney fees – which are 10 times higher than those charged by other municipalities of similar size. They say they are too punitive and onerous for homeowners, especially in light of the economic devastation caused by the coronavirus pandemic.
âAfter COVID, I think this is something we should revisit now to make sure we don’t overload people who are already struggling,â Mayor Paige Gebhardt Cognetti said.
County records show that hundreds of residential and business owners in Scranton were billed the fees. In some cases, the charge was just a few dollars, and in one case it was just one dollar. But many delinquent owners have paid hundreds or even thousands of dollars in attorney fees.
Alan Levy and Fay Sackstein, owners of a commercial property at 2201 Washburn St., for example, paid $ 4,324.42 in lien attorney fees, according to county records. They owed more than $ 40,000 in overdue county, municipal and school taxes for 2019 and 2020. Attempts to reach them were unsuccessful.
In another case, Tarji Barnes, owner of a residential property at 215Â½ William St. who owed more than $ 2,000 in past due municipal, school and county taxes in 2019 and 2020, paid $ 229.49 in fees. lawyer in privilege. Attempts to reach Barnes were unsuccessful.
City attorney Joseph O’Brien said city officials also questioned why the office only charged the fees to Scranton owners and why the contract to collect the fees was awarded to Joyce without have been submitted to a call for tenders or approved at a meeting of the commissioners. Bidding on the contract could have resulted in lower fees, he said.
County Commissioners Debi Domenick and Jerry Notarianni and County Attorney Frank Ruggiero defended the County’s handling of the case. They argue that the attorney’s fees are reasonable and dispute the city’s claim that officials were not notified. They say Joyce’s contract did not have to be bid on because it is a professional service, which is exempt from bidding requirements.
âThey (the city officials) just sit there collecting and cashing their checks and the lawyers who generate that income for them are crucified for doing a good job,â Domenick said.
Notarianni said he was surprised at the amount of money the law firm earned in attorney fees, but pointed out that the arrangement is more beneficial to the city’s taxpayers than Scranton’s earlier arrangement with the firm formerly known as the Northeast Revenue Service; the company is now called Elite Revenue Solutions.
The company’s 15% commission was deducted from the money it gave to the city. The 10% attorney fees earned by Joyce, Carmody & Moran are paid by delinquent taxpayers and do not reduce overdue tax revenue returned to Scranton, Notarianni said.
âThe people who pay the money are the people who are behind in taxes,â he said.
Minority Commissioner Chris Chermak said he didn’t realize how much money Joyce would make from the fees. While he acknowledges the contract did not have to be tendered, he said the county should have considered doing so given the amount of money involved.
“It’s a big item, so maybe it should have been looked at,” he said.
O’Brien said the city does not object to attorney fees, but that they must comply with the Municipal Claim Tax Lien Act (MCTLA), which requires them to be “reasonable.” The law does not set a specific limit, but states that fees should be based on the legal complexity of the case, the amount of taxes collected, and be comparable to what other lawyers charge for similar work.
A review of the policies of several other municipalities of similar size, including Bethlehem and Allentown, found that they allow attorney fees, but limit them to 1% of overdue tax.
âAre they allowed to charge legal fees? Yes. But they don’t have the right to charge excessive fees, âO’Brien said. âYou have a lawyer who earns $ 100,000 a monthâ¦ for what he used to do for $ 100,000 a year. It is not fair.
City officials have also said Joyce is being too aggressive in filing liens on taxes owed for 2020, which are only six months late.
The city isn’t alone in questioning the fees, O’Brien said. Lackawanna County Assistant Treasurer John Grzenda first brought the issue to the town’s attention.
In a May 12 email to city treasurer Mary Jo Sheridan, Grzenda said he wanted to alert her to an issue that was “bothering my conscience” after seeing the amount of money being paid to Joyce. in April and May.
Grzenda told the newspaper that he alerted officials because he also believed the 10% fee was excessive and was concerned that the Joyce contract had been the subject of a public offer or vote during a meeting of commissioners.
Joyce defends the charges, saying the 10% charge is standard in the debt collection industry. Although the charge is listed as “attorney’s privilege fee,” he said he was doing more than just filing liens.
âWe don’t just lay down privileges and let them sit,â he said. âWe contact people, we notify and we make an effort to try to find people. “
He said the fees, received only when taxpayers pay their unpaid bills, are his only compensation as he no longer receives a deposit and does not charge the tax claims office for any other legal work.
âWe do all the sales, we send out all the other notices and provide that advice and guidance for day-to-day operations,â Joyce said. âWe provide this at no cost to the county. “
As to why the fee is only charged to residents of Scranton, Ruggiero said Scranton is the only municipality that allows lien filing, which is allowed under the MCTLA. All other municipalities for which the office collects fall under a different law, the Law on the Sale of Property Tax.
âIt’s not like we woke up one day and decided to treat Scranton any differently,â Ruggiero said. âIt does not apply to any other municipality.
County officials also insist that city officials were made aware of the charges during various discussions. Even though there was a misunderstanding, Ruggiero said the intergovernmental agreement contains a section that refers to Lackawanna County Ordinance 244 of 2016, which sets a rate of 10% for “costs incurred for the collection. of any overdue account under the MCTLA “.
“If they want to admit that they haven’t read it, then it’s up to them,” Ruggiero said.
Cognetti and O’Brien acknowledge that the agreement mentions the ordinance, but note that the ordinance is primarily intended to give older taxpayers more time to pay overdue taxes under certain conditions. The 10% legal fee is shown on one line in the last section of the order.
During discussions on the deal, county officials did not disclose their intention to use Ordinance 244 as a tool for 10% legal fees to bill all taxpayers based on a program intended to aâ¦ subset of our elderly taxpayers in county government, âCognetti says.
While the county maintains the fees are reasonable, Ruggiero said county officials are open to discussions about reducing them. If that happens, it probably wouldn’t be until next year.
Cognetti said she was confident a deal would be made.
âI think this has been good for the city, and again, apart from a few communication breakdowns, we have had a very good working relationship with the tax claims office,â she said.