Taxpayer FAQ:          (Employers: click here)

Why have I received a “NOTICE PRIOR TO WAGE ATTACHMENT”?

You received a certified notice before wage attachment from Berkheimer because you failed to pay delinquent taxes/fees due and have not responded to prior notices sent to you.  If you fail to respond to this notice to resolve the delinquency, Berkheimer will institute a Wage Attachment with your employer within 30 days.

What is a wage attachment?

A wage attachment is a request made by a tax collector or tax officer asking that an individual’s employer withhold a portion of the employee’s pay in order to satisfy a delinquent tax which it has been unable to collect from the employee via other means.  The use of Wage Attachments for the collection of delinquent wage and personal taxes is authorized under Section 702 of the Local Tax Enabling Act (“LTEA”). The taxes that may be collected utilizing this process include: Earned Income, Local Service, Occupation Assessment and Per Capita.

What are my options at this point?

The issuance of the certified notice before wage attachment is the collector’s final attempt to have the taxpayer contact them in regards to the debt being pursued.  At this point the taxpayer still has the ability to contact us to make payment in full of the amounts due or to set up payment arrangements to clear the debt prior to the employer being notified.  You have 15 days from the date of issuance of this notice to contact the collector to set up arrangements or to make payment in full.  If you fail to do so, the request is sent to your employer.  Once your employer is contacted, no other arrangements can be made.

  • Pay in Full – You can return a copy of the notification sent to you along with payment of the full amount due. Payment can also be made via our website at hab-inc.com/electronic-services/online-payments/ . Under Delinquent Notice Tax Payments, select the payment type you wish to utilize (ACH or Credit Card).  There is a nominal fee charged by the 3rd party provider, Official Payments, to accept credit card payments. This fee is retained by Official Payments to cover credit cards processing fees associated with the transaction.
  • Payment Plan – You can return a copy of the notification along with a letter stating that you wish to set up a payment arrangement. The letter should state the amount you wish to pay each month. Once the payment plan is established you will be sent information on how to pay the amount due. You can also request a payment plan via our website at www.hab-inc.com/hab-dlt-payment-plan-request/There is a $5.00 per payment charge added to all payment plans established.
  • You can also contact our office using the phone number printed on the notice or via e-mail at www.hab-inc.com/contact-customer-care-form-individual/.

What should I do if I feel I do not owe the taxes that are shown as due?

If you feel that you have received this notice in error, you should contact our office to notify us of this fact. At that point your account would be placed on hold and you would be given the opportunity to provide us with the documentation needed to remove the taxes shown as due.

If you have recently paid the taxes to us, it is possible that this notice and your payment have crossed in the mail.  If this is the case, please contact us so that we can verify that your payment has been received. If it has, we will let you know the matter is now closed.

How much of my pay is my employer allowed to take each week?

Under the LTEA an employer is permitted to withhold up to 10% of your gross wages, commissions or earnings for local taxes now due, or which hereafter become due, until such time that the listed balance is paid in full.  The funds that are collected are then sent to the tax collector/officer either immediately after deducted from your pay or on a monthly basis.

The wage attachment notice I received states that the amounts owed are for my spouse, is this legal?

Yes, Section 702 of the LTEA does indeed allow for a tax administrator to request that an employer withhold the amounts due from an employee’s pay for taxes that remain unpaid by their spouse.  The filing of a wage attachment against a spouse is normally utilized after all other efforts to collect upon the debt have been utilized by the collector.  If the amounts owed are for a former spouse, you must provide our office with a copy of the divorce decree to have the wage attachment withdrawn.

If you have questions on this process or the notice that you have received, please feel free to contact us at the phone number on your notice or visit our website at www.hab-inc.com/contact-us.

I have received a letter from Berkheimer stating that what was reported on my Commonwealth of Pennsylvania Return differs from what I reported to them.  I have questions on why this took place, they are: Why did the state provide this to my tax collector? Why should my state and local earnings match? And what do I do now?

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Why can the state provide this information to your firm up to two years after filing your state return?

Part of the agreements between the PA Dept. of Revenue and the PA Dept. of Education requires that the Dept. of Revenue provide each school district with an annual report that identifies the individuals that utilized their unique “school code” when they filed their state return, and the income amount that was reported. These reports are used to verify that each school district is receiving all of the taxes due it, and is also utilized to determine funding levels for the districts. This annual report is released approximately 15 months AFTER the taxpayer was required to file their state return. For example, the PA-40 form for 2015 was due on 04/15/16, the Dept. of Revenue then released the report described above in or around July 2017.

Why should my local earnings match my state earnings?

In 2003, ACT 166 passed the Pennsylvania Legislature and made the definitions of “earned income” and “net profits” identical for both local and state taxation purposes. The change was implemented to help eliminate the confusion that had existed to that point with what was taxable to each. By implementing the change, it became easier for taxpayers and preparers alike to know exactly what was to be reported to their local collector.  The definitions are based on state’s which are found in the Tax Reform Code of 1971”. Based on ACT 166 there is only one source of earned income that is not taxed by both. That income source is “Clergy Housing Allowances” which are taxed by the state, but not locally.

So for 2003 forward, what appears on a taxpayers PA-40 form as taxable earnings should also be reported on the local return.

What should I do now?

First – Don’t panic!! There are a few reasons that there could be a legitimate reason for the discrepancy, some that result in no additional tax due and others that may. The purpose of the letter is to try to determine if one exists and if it does, to allow you, the taxpayer, to tell us so.  Some of the reasons that they do not match are as follows:

The following reasons are taxable:

  1. You took a distribution from a Retirement account (IRA, Roth IRA, 401k, 403K) that was considered to be an “Early Distribution” for which an exception did not exist. Whether the distribution is considered an early distribution or not can be determined by looking at the 1099-R for the year in question and looking for a Code of 1 in box 7. If there is Code 1 in box 7, the distribution is considered to have been taken prior to the legal age to do so without penalty (59 ½ yrs. of age). If you have done so, you are taxed by the Commonwealth of Pennsylvania based on the Cost Recovery method (Total distribution – your contributions to the plan = taxable income). The state considers the portion taken attributed to what your employer contributed to your plan and the gain on the deposits made, as “earned income” for state tax purposes. Since it is considered taxable to PA, it is to be included as income locally as well.  If the code in Box 7 is a 2, the distribution may be taxable. The taxability of the distribution is dependent on your plan’s retirement rules.  You will need to provide us with the basis for the withdrawal prior to age 59 ½ years of age, so it can be researched and a determination on taxability rendered.
  2. You utilized the Local Wage Box on your W-2, instead of the State wage box. There are a number of reasons that prior to tax year 2013, that your employer may not have withheld on all of your taxable state wages. So if you relied on the Local box when filing and your State wages were higher, that is where the discrepancy came from.  You are taxable on your full taxable wages for each year you are a resident of the jurisdiction(s) tax is levied for.

If you do find that you owe the taxes or a portion of those shown on the letter you can submit the payment shown or if you need time to pay, contact us to establish a payment plan to do so.

The following reasons are NOT taxable and you simply need to provide explanation to their origin.

  1. You had income from SUB-CHAPTER S corporation(s). This type of income is considered to be Investment income which is taxable as such to PA, but is not taxable locally. Unfortunately, it is reported on the PA-40 form in the same location as Net Profits earned from taxable business activities.
  2. You received income from the lease of your property to a Marcellus Shale drilling operation or for an easement for use of a portion of your property for a similar operation. Unless you are taking an active role in the exploration process, this income is NOT earned income and is also considered investment income. Unfortunately it too is reported on the same line as taxable income to the state and then reported to us as such.
  3. You reported your spouse’s income on the PA-40 form as part of the joint filing and we do not have them connected to your social security number on our system. Since the PA-40 form is a joint return (both incomes combined for filing purposes), the income reported to us by the PA Department of Revenue it is associated with the 1st social security number on the state return. So if we do not have your social security number associated with your spouses  on our files, it is assumed to all be your income.  If this is the case you simply need to provide us their information so that we can verify that the income and payments received equal that of the state report.
  4. You resided in the named school district for only a portion of the year. The state reports you full income based on the school district code used when you file the return at year end, so all is attributed to the area named. If this is the case you may have filed for a portion of the year with another tax collector and that information is not shared between collectors, so there is no way to verify that without asking for the explanation of the difference.
  5. You did not live in the named school district at all for the year in question, but did move there in a subsequent year. This is another quirk of how the state tracks its taxpayers.  If you live in School District XYZ in 2012 and moved to School District ABC in 2013, when your 2013 return is entered into the state’s system your school district for the prior year(s) on file are changed to reflect where you live currently. This results in you appearing to have resided in the current school district for the prior year as well, and that is the year being reviewed in this process.
  6. You worked in the City of Philadelphia and had city wage tax withheld on your wages and failed to file the annual return with your tax administrator showing that the taxes paid there covered your local tax liability. If this is case, it will appear that you reported no income and/or taxes paid when the comparison is done. If this is the case you simply need to file for the year in question showing that is the case.

In each of the 6 scenarios listed above, you simply need to provide us with the appropriate explanation and necessary supporting document so that we can update our records accordingly.

Pennsylvania Personal Income Tax Guide (PIT) – Find out what is taxable and what is not taxable.

If you have additional/specific questions that are not addressed above, please click on the link to send an inquiry to our customer care department.

Please note that these are general frequently asked questions. If you have a specific questions, please use the Customer Care Department link above to contact us with your specific question(s).