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Assuming the plan does not consist of any elective deferrals that you made via salary deductions, then the lump sum will be subject to PA income taxes. If you made any elective deferrals to the plan then those amounts could be recovered tax-free.
You could attach a statement to your response explaining that you did not report the income as it was not properly reported on your W-2 and request that the late penalties be abated.
The links below explain PA's treatment of nonqualified deferred compensation:
See pages 7-52 through 7-55 of the PIT guide referenced in the link above.