County looking to stop repeated bankruptcies being used to avoid paying property taxes

By Jennifer Learn-Andes - | August 20th, 2016 4:21 pm

Property owners can automatically get their real estate out of Luzerne County tax auctions by filing for bankruptcy, but the county’s tax-claim oversee is trying to stop that power from being abused.

“We’re trying to weed out those who may be trying to hide behind the protection and use it as a tool or method to avoid tax sales versus those using the law as it was intended,” said Sean Shamany, of Northeast Revenue Service LLC, which was hired to run the county’s tax-claim office in 2010.

While he wouldn’t discuss specific examples by name, the upcoming Sept. 20, first-stage upset auction includes several big-ticket tax debts that have snowballed for years without any payments.

One example is a Hanover Township residence carrying more than $60,000 in unpaid taxes dating back to 2009.

Owners Stanley and Molly Tarutis filed for bankruptcy in September shortly before the property was auctioned — four years in a row, according to court records and Northeast Revenue.

The Tarutis bankruptcy cases all were terminated a short time later — November 2012, December 2013, September 2014 and October 2015 — twice because the filers failed to submit required documents; once because they did not pay a filing fee; and the remaining time because they indicated money would be arriving to pay their debt, court records say.

Northeast Revenue also had approved a repayment agreement in 2011 on the Clifton Court property, but it was voided in 2012 due to nonpayment, the company said. The 1-acre property is assessed at $237,900, records show.

Stanley Tarutis said Friday that he and his wife have encountered challenges paying the debt, and he said he would be willing to discuss specifics at a later date.

Northeast Revenue is considering increased intervention on properties that have a history of repeated bankruptcy filings, said Dyan E. Dinstel, an attorney with Northeast Revenue.

A bankruptcy judge may grant permission to proceed with tax sales —regardless of a pending or future bankruptcy —if Northeast Revenue demonstrates a property owner has repeatedly resorted to bankruptcy solely to avoid sales, Dinstel said.

Northeast Revenue has had success with this approach. In 2011, for example, the company sought court approval to auction a dozen properties belonging to the late Joseph Nowakowski because a series of bankruptcies kept the properties out of tax sales for years, resulting in $325,000 in unpaid taxes dating back to 1996. Northeast Revenue’s push resulted in payment of the debt.

Shamany said a staff attorney specializing in bankruptcy is reviewing all pending cases.

“It’s a work in progress,” he said. “This will take time because there are steps and laws that must be followed, and we can’t step out of our bounds.”

Mounting debt

Another property listed in the Sept. 20 sale — a commercial structure in Wyoming owned by JPM Realty Inc. — has amassed more than $157,000 in unpaid property taxes dating back nearly two decades, records show.

State corporation records list John Mosca as president and treasurer of JPM Realty, and he has advertised the structure at 55 W. Seventh Street as home of his business — Cabinets, Counters And More Inc. The property, which includes 2.33 acres, is assessed at $248,400, county records show.

JPM’s first bankruptcy was filed in 1997 and closed in 2000, and the company again filed for bankruptcy in 2010, court records show.

The bankruptcy reorganization plan that took effect around the time the second bankruptcy was terminated in 2012 called for JPM to make an immediate $10,000 deposit toward the delinquent taxes on the Wyoming property and another Wilkes-Barre Township property the company later sold.

While this deposit was made in 2012, nothing has been paid on the Wyoming property since then, resulting in taxes owed back to 1996, Dinstel said.

The bankruptcy plan said JPM must pay several other creditors and then start paying $3,800 per month until the back taxes are paid in full with 9-percent interest.

Northeast Revenue has listed the property in the Sept. 20 auction based on the argument that JPM should have started making payments toward the real estate taxes by now.

Mosca said he could not comment on the matter Thursday because he was in a meeting. He did not respond to another request for comment Friday.

Monitoring required

The former Great Northern Press property on Gilligan Street in Hanover Township and Wilkes-Barre has racked up $269,000 in unpaid back taxes from 2007 through 2015 and had been in bankruptcy, records show.

Northeast Revenue listed the property in the September sale after a recent review of all delinquent properties that had been coded as bankruptcies in tax claim records prior to Northeast Revenue taking over.

Property owners aren’t required to notify county tax claim when bankruptcies are terminated, and some records about pending bankruptcies forwarded by the county to Northeast Revenue were incomplete, Dinstel said.

In this case, digging was required because the property is owned by South Carolina-based Business Loan Center LLC but was listed as an asset in a bankruptcy involving another entity, Ciena Capital LLC, Dinstel said. This bankruptcy also was more difficult to track down because it was filed outside Northeastern Pennsylvania.

“There was absolutely no information about the bankruptcy in our system from prior to Northeast Revenue taking over,” she said.

The bankruptcy was closed in 2011, allowing the sale to proceed, she said.

The two-parcel property is assessed at a total $851,900, records show.

Properties are eligible for auction if taxes are two years past due. In addition to filing for bankruptcy, property owners can avoid sales by obtaining a repayment plan or convincing a judge to grant them more time. The county also created a hardship program for property owners facing job loss or other emergencies.

First-stage sales are less popular because bidders must pay all back taxes and accept responsibility for liens attached to their purchases. Unsold properties will advance to a free-and-clear auction in 2017, when old liens and taxes are removed.

A total 2,359 properties were listed for the Sept. 20 sale as of Friday afternoon.

The active sales list includes “The Sanctuary,” a failed 27-acre Wright Township development owned by W-Cat Inc., a company set up by disgraced attorney Robert Powell and past county prothonotary Jill Moran. A total $96,600 in taxes are owed on that property for 2014 and 2015, records show.

Luzerne County Courthouse. (Pete G. Wilcox|Times Leader) County Courthouse. (Pete G. Wilcox|Times Leader)
Northeast Revenue looks to stop repeated filings being used to avoid taxes

By Jennifer Learn-Andes

Information on upcoming Luzerne County back-tax auctions is posted at

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.

Information on upcoming Luzerne County back-tax auctions is posted at