We provide here a written summary of answers provided by the Department of Revenue to the committee at periodic question and answer sessions. These documents are classified as Revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on a specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.
Q&A with the Pennsylvania Department of Revenue
Scenario: recent notice where the Taxpayer had PA WH on a W-2 in excess of 3.07%.
Recent notice where the Taxpayer had PA WH on a W-2 in excess of 3.07%. The State sent an invoice for the excess because they adjusted the WH down to 3.07%. They did this without ever referencing the W-2. We had to reply to the notice and send a copy of the W-2.
Since they already had a copy from the employer, why couldn’t they just verify it internally?
Without any specific details on this particular case and knowing that both paper and electronic filing methods allow the submission of Schedule W-2S and knowing that a number of returns are submitted each year without any backup documentation, the DOR will provide a general answer at this time.
As part of the normal examination process, the Department’s tax examination staff reviews the entire return to locate the physical W-2 if the submission was via paper. If the submission was via electronic means, we would review the entire record transmission to locate the W-2 information and in both cases, conduct any necessary research through the
Department’s internal systems in an attempt to verify the withholding information before adjusting the return or requesting information from the taxpayer.
However, please keep in mind that since employers are not required to submit the individual W-2s, via electronic media or paper before January 31st; and that during this same period of time, the department also receives hundreds of thousands of other returns and payments for posting and processing. There is a large convergence of information in a short period of time. This results in cases where not all of the individual W-2s or summary information is available for cross-reference when the initial examination of a PA-40 return occurs.
When these situations occur, we are left with three options: One is to correspond with the taxpayer to request information. (We prefer this method so that the taxpayer is aware that information is needed and that their return is on hold.) The second is to place the return into an internal hold and go back at a later date to re-review the item. (This is the less preferred method during our busy time, since it means holding the return for X number of days and then going back for a second look.) The third is to make an adjustment to the return and let the taxpayer correspond with the department if they disagree. (This is the least preferred method and is normally only used when previous attempts to get any necessary information from the taxpayer have failed.)