Portnoff 'Tax Farming' is Privatization at its Worst

Remember how casinos were supposed to make all of our property tax problems go away? They just went up , and now its  hire a private tax collector like Portnoff Law Associates, to squeeze every last nickel out of you.

Privatized tax collection, called tax farming, has historically been quite unpopular, especially here in the Lehigh Valley. President John Adams found that out when he imposed a house tax, the first and last federal property tax, to pay for a possible war with France.

Private assessors were hired to go house to house, counting windows and doors, upon which the tax was based. Northampton County residents, many of them familiar with a similar and despised "hearth tax" in Germany, resisted. From second floor windows, housewives poured hot water on the heads of private assessors. 

John Fries, a former Revolutionary War officer, led 60 armed men to intimidate and threaten assessors. When 19 tax resisters were hauled off to the Sun Inn, Fries and his men galloped to Bethlehem and forced the Marshal to release them.

Naturally, Fries was sentenced to hang, although President Adams did pardon him.

Rather than take a lesson from history, state and local officials have passed laws and signed contracts with profit-driven private tax collectors. Property owners now face the predatory practices of Pennsylvania's very own tax farmers.

The most prominent of these? Portnoff Law Associates, a law firm that was hit with a $1 million class action verdict in 2009 for unauthorized fees, interest, penalties or attorney fees. This firm also lost 2005 litigation by a Bethlehem family, who objected to seeing their water bill double in just two months. Instead of riding Portnoff does the tax farming for twenty-six municipalities and school districts in Northampton and Lehigh County, including both Easton and Bethlehem.

The way our real estate tax laws are set up, a person behind on property taxes ordinarily has two years before he has to worry about his home being sold at tax sale. The county conducts annual tax sales for properties two or more years delinquent, giving a homeowner ample opportunity to set up payment plans with no attorney fees.

And if a municipal lien is filed for an unpaid garbage or sewer bill, the lien must be paid before the property is sold. A municipality will always get its money. But that wasn't good enough for many local officials, who wanted their money right away.

Lehigh Valley communities have quickly jumped on the Portnoff Express. Said Bethlehem's Tax administrator Timko: "Are we happy? Oh yes, deliriously happy."

Lehigh and Northampton County municipalities on this bandwagon include Allentown Downtown Improvement Authority, Allentown School District, Catasauqua Area School District, Allentown, Northern Lehigh School District, Northwestern Lehigh School District, Parkland School District, Salisbury Township School District, Whitehall-Coplay Area School District, Whitehall Township, Bethlehem, Easton, Lower Mount Bethel Township, Northampton Area School District and Wilson Area School District.

If you live in any of these places, expect no mercy. Don't get sick. Check your mailbox every day.

Under our privatized tax collection laws, tax farmers like Portnoff can reap "reasonable" attorney fees. But what Portnoff thinks is reasonable is outrageous to the rest of us.

To open a file and send a demand letter, the charge varies from $150 to $200. And every breath they take after that ends up costing homeowners even more money.

A title company can't even get a Portnoff employee to talk to them without a check for $25. But where privateers make the really big money is when they list your property for sheriff's sale, sometimes for ten times as much as the original lien.

Portnoff makes a great deal of money, delinquent taxpayers lose a lot of money and become very disenchanted by our government, but municipalities make no more money than they would if they simply permitted the counties to collect these late taxes. Municipalities do not benefit from this privatization in the long run. And the homeowner always suffers.

Privatization of trash collection or even nursing homes is bound to fire people up. But in a basic governmental function, the collection of tax, the danger of privatization is at its worst.

We're doing exactly what Benjamin Franklin sarcastically predicted would guarantee revolution - entrusting tax collection to a group "composed of the most indiscreet, ill-bred, and insolent [men] you can find. ... Let these have large salaries out of extorted revenue. . . . If any revenue officers are suspected of the least tenderness for the people, discard them."

For some quick cash that a school district like Bethlehem is going to get anyway, does it really make sense to hire a tax farmer, whose only real allegiance is to its own bottom line? 

Bethlehem School Board member Michael Faccinetto thinks so. "If this can get us even $20,000 for free, we'd be stupid not to take it.” 

Where is John Fries when we need him?