Pennsylvania county tax collection committees (TCC) are charged with overseeing the collection of earned income taxes (EIT) for all entities in a county levying such a tax.
To further this, all taxing bodies levying an EIT are provided representation on the committee to help protect their interests.
Warren County is no different. The Warren County Tax Collection Committee features a representative from the Warren County School District (WCSD), the City of Warren and two representatives, one a non-voting alternate, from other municipalities.
In some cases, TCCs contract with an outside entity to collect the tax and distribute each taxing body's share. The cost for such service is generally shared amongst taxing bodies and paid either by direct deduction from EIT revenue or as an expense paid by the TCC.
In Warren County, one of the taxing bodies, the WCSD, operates the EIT office which handles collection of the tax. To cover costs of the operation, a 3 percent deduction is made from the EIT revenues for each taxing body.
In the case of the municipalities, the EIT office pays out two expenses to each municipality with an EIT, one to the municipality for the EIT revenue and one for the three percent charge to the WCSD.
As the both the 3 percent charge and the WCSD EIT revenue go into the WCSD general fund, in its case the EIT office pays out only a single expense the revenue without any charge deducted. Essentially, the WCSD does not charge itself, or pay separately, the three percent fee.
This doesn't necessarily mean the WCSD doesn't pay 3 percent of its EIT revenue toward operation of the EIT office, only that it doesn't bill itself for the cost.
Now, the municipalities want to see what the WCSD's share of the load is when it comes to funding the EIT office. They are requesting a revenue and expense report on EIT operations to determine what percentage of the WCSD's EIT revenue is actually going toward EIT office operations and to see what operating expenses at the office actually is compared to revenue from the fee.
The issue was raised during the quarterly meeting of the Warren County TCC this week.
WCSD's representative to the committee, Jim Grosch, explained that, while the rest of the committee had brought the issue to him, he didn't feel comfortable bringing the request forward personally, as he is a WCSD employee.
Grosch suggested the TCC, as a body, send a formal request to WCSD school board secretary Ruth Huck to be put to the board, or attend a WCSD board of school directors committee meeting and make a formal request directly to the board.
Grosch explained why the district didn't charge itself the 3 percent, namely that its EIT revenue and the 3 percent charge all go to the same account.
"I think the concern from the municipalities is... that the 3 percent from all of the municipalities that receive EIT funds that go to pay for the tax collection is covering the expenses," city representative to the committee Donna Risinger posited.
"It seems like you need to see... where that money is going," non-voting representative from the municipalities Tia Drescher said. "Is it going to the operation of the EIT office or is it just going into the district's general fund."
"It just seems like it's a wash," Grosch said. "The 3 percent from the school district is going the same place as the municipalities 3 percent."
Local Government Specialist with the Pennsylvania Department of of Community and Economic Development (DCED) Ed Fosnaught noted that, by law, the committee, "has the discretion to decide whether to just withhold the commission or to (receive a) bill for it."
"We're just curious to see if there's a profit or loss to the district," representative to the committee from the municipalities Arden Knapp said. "If the district makes a little profit so be it."
"The direction I have from the district is, we're fulfilling our contract," Grosch said.
"Isn't, really, the question you're asking, whether they make a little more or have a little loss, is, 'Are we getting a fair price?'," Fosnaught asked.
"I guess what we're asking is if it's only costing 2 percent to do it, why are we paying 3," Knapp said.
Grosch pointed out that if a private firm handled EIT collection, the committee would be charged a fee and the actual operational expenses would be proprietary information.
Drescher argued that, as the WCSD is a public school district, the information was subject to a request under Pennsylvania's Right-To-Know law.
"We don't want to do that is we could avoid it," Drescher noted.
Fosnaught expressed doubt the WCSD would deny a formal request to the board making a right-to-know necessary saying, "I'd be very surprised if the school district didn't respond to your request."
Committee members approved sending a formal request to the board through Huck and a copy to Board President Arthur Stewart.
"I think once we see the district's budget it won't be a problem," Knapp said. "It'll kind of clear up the muddy waters."