Fees imposed by a municipality to recoup the costs of collecting unpaid taxes are not an additional tax on delinquent taxpayers, the Commonwealth Court held in Iacurci v. County of Allegheny, __ A.3d __ (No. 1886 C.D. 2014, filed April 14, 2015). Prior to 2003, the Municipal Claims and Tax Lien Act (MCTLA) allowed for the collection of attorney fees for “municipal claims” but, due to an apparent drafting omission, not for “tax claims.” In Act 20 of 2003 the legislature corrected the error by authorizing taxing authorities to collect attorney fees expended in collecting “tax claims,” retroactive to 1996. Act 20 also broadened the definition of “taxes” to “include[e] reasonable attorney fees.” The plaintiffs in this case – all Allegheny County property owners whose property was subject to a County tax lien and who were billed by the County or its agent for attorney fees – challenged the constitutionality of Act 20, arguing, inter alia, that it imposed new taxes that were unconstitutionally retroactive. The trial court dismissed the case on preliminary objections.
On appeal, the Commonwealth Court affirmed. Writing for the unanimous panel, Judge Brobson first addressed Appellants’ argument that Act 20 imposed new taxes, which they premised upon the amended definition of “taxes” to include reasonable attorney fees allowed by the MCTLA. The Court rejected Appellants’ narrow focus on the definition of “taxes” because it ignored the broader statutory framework of the MCTLA, which the Court explained is not a taxing statute but a mechanism for the collection of delinquent taxes. Thus, “the most straightforward reading of the statute is that municipalities may recover the penalties, interest and costs of collecting unpaid taxes from delinquent taxpayers by including those penalties, interest, and costs in a tax claim filed pursuant to the MCTLA.” The Court also rejected Appellants’ argument that prior Pennsylvania Supreme Court decisions compelled the conclusion that Act 20 imposed new “taxes.” Finally, because Act 20 does not impose new taxes, the Court held that its retroactive application did not pose any due process issues.