Greater Harrisburg's Community Magazine

Deja Vu? City residents once again protest penalty tax assessments.

For the second year in a row, Harrisburg residents claim that a local collections agency is improperly slapping them with delinquency charges.

And, for the second year in a row, that agency denies any wrongdoing.

Keystone Collections, the firm that assesses Harrisburg City School District’s annual occupation tax, has come under fire from taxpayers who say they received penalty charges for their 2017 tax bills, despite never receiving initial invoices.

The district’s $120 occupation tax is levied annually on any city resident who holds a job. It’s separate from the city’s Local Services Tax, which takes $3 a week from any employee in Harrisburg, including commuters.

Fulton Street resident Lynn Schaufelberger received a $180 invoice from Keystone Collections on April 25, charging her $60 for fees and services on top of the $120 flat tax rate. She’s certain she never received any first notice of the tax bill, which Keystone claims was issued to her in July.

Schaufelberger receives Social Security disability payments because chronic illness prevents her from working. She knew she couldn’t afford the hefty fine on her fixed income and was also adamant that she shouldn’t be taxed for a job she doesn’t have.

“I got nowhere trying to argue the fine,” Schaufelberger said, after calling Keystone’s offices to explain her circumstances.

In neighborhood social media groups, almost a dozen residents have leveled the same charge as Schaufelberger—Keystone billed them a late penalty without sending an initial tax notice, they claimed.

The pattern is consistent with complaints from last year, when dozens of taxpayers said that they received delinquent charges from Keystone without ever seeing their first bills.

Following the Money

Keystone representatives stand by the agency’s system for recovering delinquent taxes. They insist that everyone who was fined a penalty in April was on a mailing list for tax bills they sent out in July 2017.

“Beginning in January, Keystone cross-checked the tax year 2017 payment data against the original mailing list,” Keystone said in a written statement. “Those on the original mailing list who did not pay the tax on time were sent a delinquent notice in April 2018.”

The company offered a nearly identical explanation last summer, when a Burg reporter inquired about missing notices in Harrisburg.

In April 2017, Harrisburg residents Annie Hughes and Timi Lesperance appeared at a Harrisburg School Board meeting to request an investigation into Keystone’s billing practices. They presented the board with a list of almost 30 taxpayers who believed they’d been unfairly assessed a penalty.

Bilal Hasan, the district’s business administrator, said that the district investigated the charges against Keystone last year and found no evidence of wrongdoing by the collections firm. He said the district is looking into the matter again after receiving a fresh round of complaints from residents.

Financial statements that the school district provided in response to a Right-to-Know request show that Keystone did collect 71 percent of its occupation tax revenue between July and September of last year. All told, the tax generated $554,866 for the district between July 2017 and January 2018, after Keystone withheld $50,000 for it mailing costs and commission fees.

According to the district’s contract with Keystone, the company is compensated $1 for each tax bill it mails, plus reimbursement for postage. Since the statements do not itemize Keystone’s costs, however, it’s impossible to isolate the commission payment to determine how many bills the agency mailed each month.

Under state tax law, the district does not have to compensate Keystone or reimburse postage for delinquent tax bills. Rather, both entities split proceeds from fees. A $12 “statutory penalty” goes to the district, and a $13.20 “cost of collection” goes to Keystone. The contract does not say who gets the $25 late filing fee.

Delinquent occupation taxes netted the district $216,369 in 2016 and 2017, and $178,683 in the ongoing 2017-18 billing period, according to financial statements.


Despite Keystone’s reassurances, some taxpayers remain adamant that their delinquent notice was the first communication they received from Keystone during the 2017 tax cycle.

Ed Nielsen said he didn’t pay his occupation tax in July 2017 because he never received a bill from Keystone. He got the penalty notice in April and paid it shortly thereafter to avoid a fight.

“If they are sure they sent it, and I am sure that I didn’t receive it, it’s kind of a stalemate in terms of who has the responsibility,” Nielsen said.

Like Neilsen, Hughes and Lesperance begrudgingly paid their penalty fees last year, even after contesting them with Keystone.

Hughes said she’s disappointed, but not surprised, to see the collections agency zealously assessing penalties again. She stands by her assertion from last year that the school board ought to commission a third-party audit of the collections firm.

“I feel like they’re failing the community,” Hughes said. “An audit is a reasonable request, and it would really assure us that our taxes are being collected fairly.”

School board members could not immediately be reached for comment.

Hughes filed a complaint against Keystone last year and urged other residents to do the same if they felt they’d been unfairly penalized.

State Attorney General spokesperson Joe Grace said that the state’s consumer complaint bureau has received 58 complaints against Keystone Collections since 2010. The AG’s office cannot comment on the existence of any investigations.

The district’s contract with Keystone expires in June 2019.

Keystone Contract by Lizzy Hardison on Scribd

Keystone Financial Statements by Lizzy Hardison on Scribd

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