On August 29, the U.S. Department of the Treasury released Notice 2020-65 in response to President Trump’s executive order allowing employers to defer the employee share of Social Security tax (6.2%) withheld from September 1 through December 31, 2010. Payment of those deferred taxes would be paid by the employer ratably, through paycheck withholdings, during pay periods from January 1, 2021 and April 30, 2021. Thus, a 0% Social Security tax will be imposed on employees from September 1 through December 31, and 12.4% tax from January 1 – April 30.
The payroll tax deferral is available on employees who make less than $4,000 in a bi-weekly paycheck. The deferral is only applicable to the 6.2% Social Security tax and not the Medicare tax or employer portion of Social Security tax.
The Notice fails to address several topics including the rules for when employees terminate employment and if the deferral is mandatory for employers.
Below for your information are links to President Trump’s executive order and the IRS’s rules related to repayment of the deferred taxes.
About the Author
Jim is the Partner in charge of the CFO for Hire division of BST & Co. The CFO for Hire division is an outsourced solution for a company’s operational accounting needs. CFO for Hire delivers timely financial information/reports to better help a business owner or not for profit executive director make more informed business decisions.
Jim’s primary responsibilities are managing complex engagements and leading special projects. He also provides leadership on corporate development, product development, and sales and marketing matters.
Posted on September 9, 2020 at 11:21 AM