I'll try to keep it short:
Sept. 2006: I start working for my current employer; they do not withhold local taxes.
April 2007: I file 2006 taxes and pay local taxes with lump-sum check.
Mid-2007 (unsure exact): Tax authority sends me forms for quarterly payments, my recollection is that I have the choice to make payments or lump-sum at tax time. I choose to make lump-sum.
April 2008: I file 2007 taxes and pay local taxes with lump-sum check.
Mid-2008 (unsure exact): receive forms for payments, again I'm sure it was voluntary and decide to make a lump-sum payment.
January 2009: Receive notice of new third-party tax collection agency, later receive forms for quarterly payments from new agency. Forms indicate that quarterly payments are required or subject to penalty.
March 2009: I suck it up and make my first quarterly payment to new agency.
April 2009: I file 2008 taxes and pay local taxes with lump-sum check to original taxing authority.
June 2009: I make second quarterly payment to new agency.
August 2009: Original tax authority sends me a bill for penalties incurred by not making quarterly payments. I send the bill back with a note reminding them that my locality is using a third party collector.
Sept. 2009: I receive the bill again with a letter explaining that the penalties are for the 2008 tax year.
It is possible (though I believe unlikely) that I mis-read the forms sent to me, but then why are they not penalizing me for 2007? Also, shouldn't I have received a warning when they didn't get payments throughout the year?