The city of Memphis, Tenn. likely will end its relationship with Texas-based Linebarger Goggan Blair & Sampson as the collection agency deals with a class-action lawsuit in the city that could cost it millions of dollars. Linebarger has collected an estimated $190 million for the city since 2004. The agency's contract expires Dec. 31.
City officials would not elaborate on how many proposals for delinquent tax collection the city is reviewing, and would not explain specifically why the city did not want to renew Linebarger's contract. Linebarger officials were unavailable for comment.
Sources said the city's Legal Division received multiple proposals for the tax-collecting contract, including one from Linebarger, and that city officials interviewed some vendors that submitted proposals last week.
Linebarger's primary target in Memphis has been delinquent property taxes on homes and businesses. The debts must be 17 months past due before the city turns them over to the firm. Under the contract, the city does not pay Linebarger any direct fees and the firm makes its money by charging debtors fees in addition to the taxes owed.
The fees charged by Linebarger have drawn multiple lawsuits, including the ongoing class-action suit that could impact as many as 60,000 people. That case surrounds the interpretation of two Tennessee statutes that provide for additional charges against delinquent taxpayers when they have to be sued. At issue is whether Linebarger can charge a 10 percent or 20 percent fee for collecting delinquent property taxes on homes and businesses.
Linebarger won a professional services contract, which did not require a bid process or council approval, from former Memphis mayor Willie Herenton in 2004 to collect delinquent city taxes.