Lehigh Valley

Overpaid taxes in Allentown to go towards pensions

Overpaid taxes in Allentown to go towards pensions

ALLENTOWN, Pa. - When Jean Connors received a letter in the mail from Berkheimer Tax Administrators, she says she had one reaction.

"I was furious."

Jean does her daughter Cristin's taxes, and in 2012 Cristin worked in Allentown. Now she's being told the $36 additional Earned Income Tax taken out of her paychecks won't be returned.

"Stating that Allentown's pension fund is in distress, and in essence they were keeping her refund," Jean explained. "They weren't giving it back to her."

The letter references Act 205. It allows municipalities in the state that are categorized as distressed to add an additional tax onto EIT. That extra charge goes to the municipality where you work, not where you live. The act is nothing new, in-fact Allentown City Council voted to approve the additional tax in 2010.

"In order to help the unfunded pension liability these municipalities can charge an additional fee added onto the EIT," explained City Councilwoman Jeanette Eichenwald.

So if you work in Allentown, your tax is higher. Every cent skimmed from your EIT goes towards the unfunded pension liability in the city.

"It helps," shared Eichenwald. "Of course it helps, I mean we're talking in the millions."

While it's helping the city, Jean says it's unfair.

"For them to say their municipal pension fund is in distress, my daughter is currently laid off, she's in distress, that $36 is money she could use," she added.

Eichenwald says many municipalities in the area are taking advantage of Act 205. She says the pension payments are set in stone, and with less money coming in many local cities and towns are hurting.

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