IRS Guidance on the Executive Action Deferring Payroll Taxes
Many employers have questions about how and whether to implement it
On August 28, the Internal Revenue Service (IRS) issued guidance that provides some explanation of how employers can defer withholding and remitting an employee’s share of Social Security tax when wages are below a certain amount. The guidance in Notice 2020-65 was issued to implement President Donald Trump’s executive action signed in early August.
The guidance is brief, and private employers still have questions about whether, and how, to implement the deferral. The president’s action only defers Social Security taxes; it doesn’t forgive them, meaning employees will have to pay the taxes later unless Congress passes a law to eliminate the liability.
Tax Deferral Background
On August 8, Trump signed a presidential memorandum that permits the deferral of the employee portion of Social Security taxes for certain employees due to the COVID-19 pandemic.
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