The more than 60,000 retired federal workers living in Maryland will soon be able to have their state income taxes deducted directly from their monthly annuity checks.
Maryland Comptroller Louis L. Goldstein has signed an agreement with the Office of Personnel Management that will soon permit the voluntary withholding. It will make Maryland the first state to take advantage of a federal law passed last year authorizing OPM to make the voluntary deductions from checks of retirees or their survivors who request it.
Michigan, Oklahoma and the District of Columbia (which has more than 58,000 retiree and survivor residents) have also expressed interest in the voluntary state-tax withholding program.
But across the Potomac, in Virginia, it may be some time before the nearly 100,000 government retirees and survivors in the Old Dominion have the option of having state taxes withheld from annuity checks, rather than filing quarterly returns to Richmond.
Virginia wants OPM to modify its rules before it will take part in the program. Under proposed OPM guidelines (outlined here April 23), state tax agencies that agree to enter the voluntary withholding program are responsible for contacting federal retirees in their states, and supplying them with information and necessary forms.
Virginia is also unhappy because the OPM plan calls for the federal government to send state tax payments quarterly, although the deductions from individual annuity checks would be made monthly. Virginia says it would lose money under that deal. It also wants a similar agreement for voluntary withholding for military retirees in the state--although that would take separate legislation.
Federal retirees in Maryland who want to sign up for the voluntary withholding (minimum monthly amount is $5) should get in touch with the Maryland Income Tax Division, Employer Withholding Section, Civil Service Annuitant Program, Annapolis, 21401, or call (301) 269-3738.
Virginia residents who want more information on what is happening--or not happening--should write the Commonwealth of Virginia, Department of Taxation, Richmond, 23282.