Q&A with the Pennsylvania Department of Revenue

Why is any W-2 that has excess withholding (over 3.07%) subject to correspondence by the Department?

Sep 30, 2013
Q:

Why is any W-2 that has excess withholding (over 3.07%) subject to correspondence by the Department? Some employees desire to have excess amounts withheld, rather than paying estimated taxes. The IRS does not object to this over withholding.

A:

W-2s and withholding provide the most opportunity for fraud in the filing of tax returns. Fake W-2s can be easily prepared and attached to a return. Fake W-2s can enable the filer to falsely report a withholding credit amount that is not paid in or it can be easily added to the taxpayer’s withholding they have paid in. Any amount of fake withholding can be incorporated into a fake W-2. We have established parameters for reviewing returns and this is one with which we have noted issues in prior years. Over the years, we have worked to try and eliminate the need for requesting the information via various methods, internal procedures, as well as additional taxpayer instructions.
 

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These documents provide a summary of the answers provided by the Department of Revenue to the PICPA Committee on State Taxation at its annual question and answer session. 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 their specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.