The IRS issued guidance on August 28th (Notice 2020-65) related to the deferral of the employee portion of Social Security taxes. In summary, it appears that employers are not required to permit the deferral, and because of the potential pitfalls and drawbacks described below, employers should consider not deferring any employee’s Social Security taxes absent a compelling reason.
Referenced by Asure Software
Your ProPay team has been diligently watching, reading, and waiting for guidance in regards to the employee tax deferral. The following are the facts that we know so far:
Because the responsibility and decision for the employee tax deferral seem to be on the employer, we advise our Clients to NOT allow the deferral at this time. Asure, our payroll software, is not yet updated to allow the deferral as there is not enough information for their software team to make the necessary changes. We have been assured that it will be updated when there is more information. We will continue to watch for and update you, our clients, as more information becomes available.
We understand that it is ultimately the employer's decision and will do what we are told. With that in mind, please find the Employee Tax Deferral Form link below for the employee and employer to read and sign. We must have a completed form returned to us before we will start deferring the OASDI. We are having a translator convert this form to Spanish. If you need a copy in Spanish please let us know.
Please reach out to us with any questions and or concerns,
Your ProPay Team
Issued on: August 8, 2020
MEMORANDUM FOR THE SECRETARY OF THE TREASURY
SUBJECT: Deferring Payroll Tax Obligations in Light
of the Ongoing COVID-19 Disaster
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:
Section 1. Policy. The 2019 novel coronavirus (COVID-19) that originated in the People’s Republic of China has caused significant, sudden, and unexpected disruptions to the American economy. On March 13, 2020, I determined that the COVID-19 pandemic is of sufficient severity and magnitude to warrant an emergency declaration under section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5207, and that is still the case today. American workers have been particularly hard hit by this ongoing disaster. While the Department of the Treasury has already undertaken historic efforts to alleviate the hardships of our citizens, it is clear that further temporary relief is necessary to support working Americans during these challenging times. To that end, today I am directing the Secretary of the Treasury to use his authority to defer certain payroll tax obligations with respect to the American workers most in need. This modest, targeted action will put money directly in the pockets of American workers and generate additional incentives for work and employment, right when the money is needed most.
Sec. 2. Deferring Certain Payroll Tax Obligations. The Secretary of the Treasury is hereby directed to use his authority pursuant to 26 U.S.C. 7508A to defer the withholding, deposit, and payment of the tax imposed by 26 U.S.C. 3101(a), and so much of the tax imposed by 26 U.S.C. 3201 as is attributable to the rate in effect under 26 U.S.C. 3101(a), on wages or compensation, as applicable, paid during the period of September 1, 2020, through December 31, 2020, subject to the following conditions:
(a) The deferral shall be made available with respect to any employee the amount of whose wages or compensation, as applicable, payable during any bi-weekly pay period generally is less than $4,000, calculated on a pre-tax basis, or the equivalent amount with respect to other pay periods.
(b) Amounts deferred pursuant to the implementation of this memorandum shall be deferred without any penalties, interest, additional amount, or addition to the tax.
Sec. 3. Authorizing Guidance. The Secretary of the Treasury shall issue guidance to implement this memorandum.
Sec. 4. Tax Forgiveness. The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.
Sec. 5. General Provisions. (a) Nothing in this memorandum shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
(d) You are authorized and directed to publish this memorandum in the Federal Register.
DONALD J. TRUMP