IRS Issues Guidance on Deferring Payroll Taxes
The 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 Trump’s executive action signed in early August.
- Employers can defer withholding, deposit and payment of an eligible employee’s share of Social Security taxes on wages paid from September 1, 2020, through December 31, 2020.
- Employers must pay the deferred taxes during the period between January 1, 2021, and April 30, 2021.
- Interest, penalties, and additions to tax will begin to accrue on unpaid taxes starting May 1, 2021.
The guidance is brief, and private employers still have questions about whether, and how, to implement the deferral. This 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.
Read more about the deferral provisions.
We are sharing the IRS guidance for payroll tax deferral that is available to us at this point. We realize that there are many unanswered questions about implementing it, if your company or organization chooses to do so, and we will keep you updated as more information becomes available.