08/31/2020
UPDATE
Over the weekend, the IRS issued guidance on the executive order issued by Trump in early August that would allow employers to defer the employee portion of the Social Security payroll taxes. This payroll tax deferral runs from September 1, 2020 through December 31, 2020 and is limited to any employee whose bi-weekly wages each period is less than $4,000 on a pre-tax basis.
NEW GUIDANCE
New information from the Treasury Department clarifies that this payroll tax âholidayâ is a deferral of taxes that - as of right now - must be paid back. It is non-binding, which means employers will need to decide whether to opt-in or not. Employers that do decide to defer the withholding & payment of these payroll taxes must double withhold those taxes from employees beginning in January of 2021 to pay back this liability by April 30, 2021, therefore creating a hardship for their workers at the beginning of the year.
It is still unclear as to who is on the hook for these taxes if an employee quits before the liability is paid back, but since the White House strongly lobbied for employers to ultimately be responsible for paying back the deferred taxes, itâs easy to see how risky this may be for business owners.
OUR RECOMMENDATION
Our recommendation remains unchanged, and we still cannot recommend opting into this payroll tax deferral. This creates unnecessary risk for business owners with very little reward, is a paperwork & compliance nightmare and there are still too many unanswered questions as far as implementation and where the overall liability will land.
Hang in there, everyone! 2020 canât last foreverâŚright?!
