What to Do If You Receive a Letter From Keystone Collections Group

Receiving a letter from Keystone Collections Group can be concerning, especially if you’re unfamiliar with the company. Keystone is a tax collection agency that works on behalf of local governments to collect unpaid taxes and fees. Ignoring their correspondence can lead to complications, so it’s important to address the situation promptly.

Common Reasons for Receiving the Letter

Keystone Collections Group typically sends letters regarding unpaid local taxes, including earned income tax (EIT), local services tax (LST), business privilege tax, and delinquent real estate taxes. Many Pennsylvania municipalities hire Keystone for tax collection, so even if you haven’t dealt with them before, they may be acting on behalf of your local government.

A common reason for receiving a letter is a discrepancy in reported income. If your employer withheld local taxes but didn’t report them correctly, Keystone may request documentation to resolve the issue. This often happens when taxpayers work in multiple municipalities or move without updating their tax records.

Self-employed individuals and independent contractors often receive notices due to unfiled or underpaid local taxes. Unlike W-2 employees, who have taxes withheld by their employer, self-employed workers must file and pay their local taxes directly. If Keystone’s records show missing payments, they will send a notice to collect the balance.

Property owners may receive a letter about unpaid real estate taxes, which can result in liens or even tax sales if left unresolved. Some municipalities also impose business privilege or mercantile taxes on companies operating within their jurisdiction, and Keystone may pursue collection if these taxes are overdue.

Validating the Debt

Before making any payments, confirm that the debt Keystone is attempting to collect is accurate. Errors in tax records, misapplied payments, or outdated information can lead to incorrect notices. Review the letter carefully, noting the tax year, type of tax, and amount due. Compare this with your own records, including past tax returns, W-2s, 1099s, or receipts for payments already made.

If anything is unclear, request a detailed breakdown of the debt. Under the Fair Debt Collection Practices Act (FDCPA), which applies to certain third-party collectors, you have the right to request validation of the debt within 30 days of receiving the notice. While Keystone primarily operates as a tax collector rather than a traditional debt collection agency, they should still provide documentation explaining how the amount was calculated, including any penalties or interest. If necessary, contact your local tax office to verify the claim.

Discrepancies can arise due to employer reporting errors, misallocated payments, or incorrect residency records. If you moved during the tax year or worked in multiple municipalities, check that the correct locality was credited with your payments. Employers sometimes withhold taxes for the wrong jurisdiction, leading to an unexpected balance. If you identify an error, gather supporting documents, such as pay stubs or employer tax filings, and submit them to Keystone with a written dispute.

Some taxpayers receive notices due to failing to file a local tax return, even if no tax was owed. Many Pennsylvania municipalities require residents to submit an annual return, and failure to do so can trigger a delinquency notice. Filing the missing return may resolve the issue without requiring payment. If Keystone insists the debt is valid despite evidence to the contrary, you may need to escalate the matter by requesting a formal appeal through the local tax authority.

Payment Options

Once the debt is verified, determine how to resolve the balance. Keystone Collections Group offers multiple payment methods, including online payments through their e-Pay system, which accepts credit cards, debit cards, and electronic checks. Credit card payments may include processing fees, so consider alternatives if you want to avoid extra costs.

For those who prefer traditional payment methods, checks or money orders can be mailed directly to Keystone. Be sure to include any reference numbers from the notice to ensure proper application of the payment. If mailing a payment, using certified mail with tracking provides proof of submission in case of disputes. Some taxpayers may also have the option to pay in person at designated locations, though availability varies by municipality.

If paying the full balance at once isn’t feasible, Keystone may offer installment plans. These agreements allow taxpayers to spread payments over several months, though interest and penalties may continue to accrue. Before committing to a plan, review the total cost, including any added fees. In some cases, negotiating a lower penalty or requesting a temporary hardship deferment may be possible if financial difficulties can be documented.

Consequences for Non-Compliance

Ignoring a notice from Keystone Collections Group can lead to escalating enforcement actions and increased financial burdens. Unpaid tax liabilities typically incur penalties and interest under Pennsylvania tax law. For example, delinquent earned income tax (EIT) accrues interest based on the federal short-term rate plus 3%. Late payment penalties may also apply, often ranging from 5% to 25% of the outstanding balance, depending on the duration of non-payment.

Beyond financial penalties, Keystone has the authority to initiate legal proceedings to recover unpaid taxes. One common enforcement tool is a tax lien, which can be recorded against real or personal property. A lien affects creditworthiness and complicates refinancing or selling assets. If the debt remains unresolved, the municipality may escalate to wage garnishment, where a portion of earnings is withheld directly from an employer to satisfy the obligation.

If non-payment continues, legal action can result in judgments against the taxpayer, adding court costs and collection fees. Municipalities may also authorize Keystone to pursue bank levies, freezing funds in personal or business accounts until the debt is paid. For property-related tax delinquencies, failure to address the issue could ultimately lead to a tax sale, where the local government auctions the property to recover unpaid amounts.

When to Consult a Professional

While many tax issues with Keystone Collections Group can be resolved independently, some situations require professional assistance. If the debt is substantial, spans multiple tax years, or involves legal complexities, consulting a tax professional or attorney can help protect your rights and ensure compliance with applicable laws.

Disputes over tax liability, particularly those involving residency or business operations in multiple jurisdictions, often require expertise in Pennsylvania’s local tax system. A certified public accountant (CPA) or enrolled agent can review tax filings, identify errors, and negotiate with Keystone on your behalf. If Keystone denies a dispute or appeal, an attorney specializing in tax law may be necessary to challenge the decision through formal legal channels. In cases of financial hardship, professionals can also help negotiate reduced penalties or installment agreements that align with your ability to pay.