MERCER Officials work on tax issue

More than 5,000 county taxpayers are affected by the court ruling.
By MARY GRZEBIENIAK
VINDICATOR CORRESPONDENT
MERCER, Pa. -- After years of litigation, the Pennsylvania Supreme Court decided last June that the way the state imposed the personal property tax from 1993 to 1996 was unconstitutional.
Now Mercer and the 19 other counties that imposed the tax must try to square things with taxpayers.
County commissioners were to try to do so at a special meeting at 9 a.m. today in the assembly room at the county courthouse.
The personal property tax was levied against stocks, bonds and certain other financial instruments such as privately held mortgages, owned by Pennsylvania residents.
Explanation: Atty. Donald McKay, the commissioners' solicitor in charge of litigation, explained that the court ruling said Pennsylvania discriminated by taxing only stocks from out-of-state unregistered corporations while exempting Pennsylvania corporate stocks.
If the tax is not retroactively reassessed on all stocks, then those who paid the discriminatory tax must get refunds.
Commissioners said they will comply by making a mutual-release offer to the 5,283 taxpayers affected.
The first step will be to reassess the 4-mill tax for the years 1993 through '96, but this time on all corporate stocks owned by Pennsylvania residents.
While this action will incur a tax obligation on those who owned Pennsylvania stocks during those years, commissioners will offer an exchange.
Bottom line: In effect, they will release taxpayers from the new tax obligation if the taxpayers release the county from any claim for refunds on taxes paid on out-of-state stocks.
"The taxpayers neither gain nor lose. It is revenue neutral," McKay said. He added that the average amount of personal property tax payments was low.
The largest refund request was $6,000, said Michael Deforest, director of the county's revenue department, adding that the average payment was $40 to $50.
Paying back taxes: People who fail to sign the release will have to pay back taxes on the Pennsylvania-based stocks, which the taxpayers will be asked to voluntarily identify, DeForest said. The release, or the taxes due, must be filed by 4:30 p.m. April 16 in order to meet a five-year statute of limitations on reassessments.
Commissioners said they will immediately send out letters explaining the exchange to the affected taxpayers after today's anticipated action. The letter will also be posted on the county's Web site, probably by the end of the week, Lazor said. The address is www.mcc.co.mercer.pa.us.
The mutual-release plan is patterned after one announced earlier this year by Montgomery County, near Philadelphia. But McKay said there is no guarantee the court will uphold Mercer's method of compliance.
If Mercer commissioners take no action to retroactively remedy the inequity, they would have to pay the $910,000 in refund requests filed within the three-year statute of limitations by 12 percent of those who paid the tax.
Lazor said the county doesn't have the money, which went into the general fund and was used for county expenses.