Please note: This blog is current to the date of its publication, Tuesday, Sept. 1. For additional updates or assistance navigating these uncertain times, please contact us or visit our SST COVID-19 resource page.
On Friday, Aug. 28, the IRS issued much-awaited guidance regarding the payroll tax deferral ordered by President Trump in early August via presidential memorandum.
In this notice, employers can defer withholding, deposit and payment of the employee portion of social security tax or the railroad retirement tax equivalent on wages paid from Sept. 1, 2020, through Dec. 31, 2020. The due date for the withholding and payment of the deferred taxes is postponed until the period beginning Jan. 1, 2021, through April 30, 2021. The employer must pay the deferred taxes within this timeframe or interest, penalties and additions to the tax will begin to accrue on May 1, 2021.
The determination of Applicable Wages is made on a pay period by pay period basis and includes compensation less than the threshold amount of $4,000 for a bi-weekly pay period.
However, there are still outstanding questions. Can an employee elect not to defer taxes, and who is responsible to pay any deferred taxes if an employee leaves or is terminated? How are the deferred taxes and repayments reported to the IRS? Additional guidance is expected, and SST is committed to delivering the most updated and accurate information.
Thanks to SST Partner Emily Cook for providing the content for this post. Click here to learn more about Emily.