On August 8, 2020, an executive order was signed that called for deferring the collection of employee’s payroll taxes – specifically the FICA portion (6.2%). Accountants, employers, payroll service providers all await additional guidance to prepare for the September 1st implementation date. Details are sparse but here are general points:
- Treasury Secretary Mnuchin says deferral will not be mandatory for employers or employees. Forbes Article: Mnuchin Suggests Payroll Tax Deferral Will Be Up To Employers: We Can’t Force People To Participate
- Deferral applies to employees with biweekly wages of less than $4,000.
- Eligible employees will be required to make an affirmative election to defer. Some have suggested a new withholding form (W-4) may be issued to handle the election.
- The Treasury will set a due date for the deferred taxes and process for employees to repay if Congress does not forgive.
As soon as guidance is available, we will send out additional information. We will likely host a webinar to review the information and provide a forum for your questions.