September 03, 2020
Guidance Issued on Payroll Tax Deferral
The Department of Treasury and the Internal Revenue Service recently issued guidance on the payroll tax deferral option President Trump announced last month that postpones the time for employers to withhold and pay employee Social Security taxes. The deferral generally applies to wages paid starting Sept. 1, 2020 through Dec. 31, 2020.
The guidance implements the Presidential memorandum allowing employers to defer withholding and payment of the employee’s portion of the Social Security tax if the employee’s wages are below a certain amount. The employee Social Security tax deferral applies to payments of taxable wages to an employee that are less than $4,000 during a bi-weekly pay period, with each pay period considered separately. No deferral is available for any payment to an employee of taxable wages of $4,000 or more for a bi-weekly pay period.
Shortly after the deferral was announced by the President last month, Treasury Secretary Steven Mnuchin stated that the deferral was optional for employers and that only an action by Congress could make this amount forgivable.
The guidance implements the Presidential memorandum allowing employers to defer withholding and payment of the employee’s portion of the Social Security tax if the employee’s wages are below a certain amount. The employee Social Security tax deferral applies to payments of taxable wages to an employee that are less than $4,000 during a bi-weekly pay period, with each pay period considered separately. No deferral is available for any payment to an employee of taxable wages of $4,000 or more for a bi-weekly pay period.
Shortly after the deferral was announced by the President last month, Treasury Secretary Steven Mnuchin stated that the deferral was optional for employers and that only an action by Congress could make this amount forgivable.
For more information, please contact:
Karin Johns