Supervisors told Chadds Ford lost $740K in revenue

Former Chadds Ford tax collector Bruce Prabel last week told supervisors that the township has lost more than $740,000 in revenue since 2007. He said the loss stems from a failure to properly collect two business related taxes.

Prabel pointed the finger at Berkheimer Associates, the company contracted to collect the Local Service and Business Privilege taxes when they were initiated in 2007.

“I believe this is a crisis,” Prabel said while making a two-hour presentation during a special meeting on Dec. 13.

The BPT is a tax on $100 per year for every business with a physical presence in the township. The LST is a tax of $1 per week, or $52 per year, on people making more than $12,000 per year employed by businesses in the township. There is an exception for people who are paying property taxes in Chadds Ford.

Prabel cited six categories where Berkheimer either collected only one of the two taxes, or failed to collect both.

Using what he said were Berkheimer’s own lists, he said the company collected the LST from employees of 250 businesses, but only collected the BPT from 150 businesses.

He said it appeared that Endo Pharmaceutical’s 500 employees were billed for the LST, but Endo was not charged the BPT, while Carrabba’s Restaurant paid the business tax, but the local service tax was never collected from its employees. DNB First and Jimmy John’s were also not charged the Business Privilege Tax, he said.

By his calculation — using 5.5 employees per business — Prabel said that discrepancy alone cost the township more than $210,000 since the township enacted the taxes.

He continued by comparing the Certificates of Occupancy and permits that were issued for businesses during that same 2007-2012 period with the Berkheimer lists. A discrepancy there, he said, cost the township more than $127,000.

Prabel also considered rental properties. Property owners who rent out apartments or homes for more than $15,000 per year are also liable for the BPT. Those owners of 116 properties weren’t charged and that cost the township almost $70,000, he said.

The biggest discrepancy, by Prabel’s calculation, came from a physical examination of business properties in the township. During a drive through the township he noticed there were 132 businesses — among them several long-standing and well-known businesses in the township such as Leader Sunoco, McDonald’s, Arby’s, Garnet Ford and AMC Theater — that weren’t showing on the tax collecting agency’s list.

That alone cost the township more than $305,000. Another $35,000 in Business Privilege and Local Service taxes were not collected from several Chadds Ford Business Association members, he said.

Prabel acknowledged that he might have miscounted some of the businesses, but not by much.

While Prabel said the problem was with Berkheimer, Ruth Ellen Duncan, a Chadds Ford resident and owner of The Strawberry Sampler, asked whether or not it was up to the township to provide a list of businesses for the collecting agency.

Prabel said it was.

Samantha Reiner of Webb Road supported his assertion. Reiner, the township manager for Edgmont Township, said the contract with Berkheimer says it’s the township’s responsibility to provide a proper business census.

A day after the meeting, a representative from the Berkheimer office collecting the taxes for Chadds Ford also said that townships usually provide a list of businesses and copies of any new business COs and permits.

Only one supervisor made any comment during the presentation.

Keith Klaver thanked Prabel for the work he did, but added that he didn’t want people to get the wrong impression of businesses that didn’t pay the taxes.

“It wasn’t their fault,” Klaver said. “It’s inappropriate to think businesses weren’t doing their job.”

In November of this year, supervisors voted to contract with a different company, Keystone Associates, to collect the business related taxes.

“We moved to Keystone for better service,” Klaver said.

Prabel made several suggestions at the end of the presentation, saying he wanted the township to come up with a master list of businesses and to see if there is a legal avenue to pursue collecting back taxes. He added, though, that the businesses should not be charged any penalties.

Supervisors took no action. Solicitor Hugh Donaghue said they would first discuss the matter in executive session because of possible legal action to get back taxes.

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About Rich Schwartzman

Rich Schwartzman has been reporting on events in the greater Chadds Ford area since September 2001 when he became the founding editor of The Chadds Ford Post. In April 2009 he became managing editor of ChaddsFordLive. He is also an award-winning photographer.

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