Even Uncle Sam is confused by piggyback system

October 21, 1992|By David Michael Ettlin | David Michael Ettlin,Staff Writer

Many Marylanders still have trouble understanding the state's piggyback income tax system, so it may come as no shock that the federal government is having some trouble grasping it as well.

The problem is that no one seems to have informed a key federal payroll center that the Maryland General Assembly's authorization for local jurisdictions to increase the piggyback-tax rate to a maximum of 60 percent was optional.

Only five of Maryland's 24 political subdivisions have imposed higher local income taxes by raising the rate -- the "piggyback" percentage that is added on to the state income tax, collected by the state comptroller's office and forwarded to Baltimore and the 23 counties.

And of the five that have increased the levy, only two local governments -- Talbot and Prince George's counties -- have set their piggyback-tax rate at 60 percent. Montgomery, Allegany and Baltimore counties have increased the rate to 55 percent, while every other jurisdiction has held the line at 50 percent (for now).

But in recent weeks, the Payroll Personnel Branch of the National Finance Center in New Orleans -- the U.S. government's biggest civilian payroll office -- has been calculating deductions for local income taxes from the paychecks of countless Maryland-resident federal employees on the basis of a uniform 60 percent piggyback rate.

"Somebody's got to tell us these things," said Dwain C. Sims, chief of the New Orleans office, who learned of the problem earlier this month. "We were unaware of it until the state of Maryland called us."

Mr. Sims was unable to say how many of the thousands of federal workers who live in Maryland were shortchanged in their paychecks because of the problem -- but he allowed as how "it would be a fairly good number, with Maryland being right next to the District there."

The difference between a 50 percent and 60 percent piggyback-tax rate amounts to half of one percent, or an additional 50 cents withheld for each $100 of income.

Mr. Sims said adjustments by computer programmers will be complicated and take several weeks to complete, once his office receives written notification from Maryland of the correct tax rates for the various jurisdictions.

"You just need to know about it, that's all," Mrs. Sims said. "The people in Maryland were very nice when they called, and very accommodating. . . .

"We will make the change as soon as we get the data. It's going to be a few pay periods because it's going to be a big change."

The good news is that excess withholding taxes eventually are returned in tax refund checks.

In the meantime, the money is in good hands: The government's.

One of those governments.

And whichever government has the money could probably use it right now. Times are tough.

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