Employers Need Additional Guidance On Deferring Payroll Taxes

In an effort to help American workers affected by the ongoing COVID-19 crisis, President Trump issued a Presidential memorandum on August 8th, directing the Secretary of the Treasury to defer the withholding, deposit and payment of certain payroll tax obligations, specifically those relating to the social security portion of FICA. On Friday, August 28th, nearly four weeks after the order, the IRS provided much-anticipated guidance via Notice 2020-65, to help employers navigate this new directive which became effective September 1, 2020.
However, there are still areas of the President’s directive that require clarification and additional guidance from the US Treasury Department. What happens if an employee is terminated or furloughed before the deferral is paid back? Are employees able to opt out of the program? Will the employer be held responsible for any taxes unable to be withheld? These are just a few of the questions on the minds of business owners.
Here are four items you should know about the payroll tax deferral:
While the guidance may appear to put more cash into employee paychecks, the long-term effects and potential employer tax liability exposure of this deferral still raise questions and concerns for many employers. We strongly encourage you to talk to your accountant or financial advisor to decide your best course of action. We will continue to update this article with new information as it becomes available.
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