The President’s memorandum deferring the employee’s portion of Social Security tax starts September 1, 2020 and goes through December 31, 2020. With no additional payroll guidance as of August 27th being provided for the memorandum’s implementation, employers are left questioning if they have to participate, what their responsibility is to their employees, and what they may be liable for.
Even though Treasurer Secretary Mnuchin has stated that the payroll tax deferral will be voluntary, but is it voluntary by the employer or by the employee? If it is voluntary for the employee, does an employer need to develop a process for making that election? If an employee makes the election to defer their payroll tax, can they later elect to revoke that election? If an employee defers their payroll tax and then leaves, is the employer responsible for making the payments? Or will the employee repay the deferred taxes on their income tax return? What does this mean for the 3rd quarter payroll reporting on Form 941? Will software be able to gather this information or will this need to be tracked manually? What impacts will there be to the employee’s W2?
As one can see, there are many unanswered questions that can only be addressed by the US Treasury and the IRS’ guidance. Until guidance is released, it is recommended that you continue with the status quo and continue to deduct and pay the employee’s portion of Social Security.
We will continue to monitor daily and will share updated information as soon as it is made available. In the meantime, if you have questions as it relates to your payroll or the impact that COVID-19 has had on your business, don’t hesitate to contact our experts today!
[button_1 text=”Contact%20Christianson%20Today!” text_size=”15″ text_color=”#ffffff” text_font=”Lato;google” text_letter_spacing=”1″ subtext_panel=”N” text_shadow_panel=”N” styling_width=”30″ styling_height=”20″ styling_border_color=”#ffffff” styling_border_size=”5″ styling_border_radius=”23″ styling_border_opacity=”100″ styling_gradient_start_color=”#1b335d” styling_gradient_end_color=”#1b335d” drop_shadow_panel=”N” inset_shadow_panel=”N” align=”center” href=”https://www.christiansoncpa.com/contact-us/”/]Keep up to date with the latest COVID updates here.