@mk1380 No, they didn't. After consulting with their counsel and some input from IRS, they came to the conclusion that it will be incorrect for them to split the W-2. They claim that IRS agrees that IRM guidance on the split W-2s for PEOs is incorrect as well.
They suggest I claim the refund on Schedule 3 as if I had two employers, since technically that was the case.
They also provided me with a letter explaining that the excess withholding was not an error but a requirement for a PEO in case of two employers.
Since TurboTax won't allow claiming the excess on Schedule 3 with a single W-2, my current plan is to prepare the return in TurboTax and then manually adjust 1040 and Schedule 3 and paper file.
