This evening, the Treasury Department and the Internal Revenue Service (IRS) issued guidance (Notice 2020-65) implementing President Trump’s Aug. 8, 2020 presidential memorandum allowing the deferral of withholding, deposit and payment of payroll tax obligations.
Today’s guidance clarifies that employers may defer withholding and payment of employees’ portion of the Social Security tax if the wages are below $4,000 per bi-weekly pay period. As a result, under the guidance, the employer may defer the taxes during one bi-weekly pay period, but does not need to do so for the next bi-weekly pay period, if wages are not under the $4,000 threshold.
The employer must repay these taxes next year between Jan. 1, 2021 and April 30, 2021. Employers are able to make arrangements to collect the taxes ratably over four months from employees, or make alternative arrangements.
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