The Treasury issued guidance on Friday afternoon related to employee payroll tax deferral. The guidance follows President Trump’s executive order made on August 8 allowing deferral of withholding and payment of Social Security taxes on employees’ paycheck. The deferral is available for employees earning less than $4,000 biweekly from September 1, 2020 through December 31, 2020. The employers must withhold and pay the deferred taxes ratably from wages and compensation paid between January 1, 2021 and April 30, 2021.
Further clarification is needed:
According to Treasury Secretary Mnuchin, such deferral is optional for the employer and not mandatory, but the guidance is silent how such election is to be made.
President Trump plans to “permanently defer” such deferred taxes if he is re-elected in November, but the taxes would ultimately have to be paid unless Congress acts to forgive the liability. So if the things don’t pan out the way he plans, are the employers responsible for the deferred taxes if the employee is no longer employed during the payback period?
Click the link below to read the Notice 2020-65