Treasury Issues Payroll Tax Deferral Guidance
As follow up to the August 8 issuance of the Presidential Memorandum to defer the collection of the employee share of payroll taxes, the U.S. Treasury issued guidance on August 28 to help employers with implementation. The guidance is fairly short and allows – but does not require – employers to suspend withholding and paying to the Internal Revenue Service employees’ Social Security payroll taxes. The payroll tax deferral runs from September 1, 2020 through December 31, 2020 and applies to employees earning wages less than $4,000 for a biweekly pay period (includes salaried workers earning less than $104,000/year). The guidance makes it clear that this is only a deferral and an employer that suspends withholding must subsequently withhold and pay all of the deferred taxes during the period from January 1, 2021 through April 30, 2021. Due to the brevity of Notice 2020-65 it is expected that additional guidance may be issued.