Dept. of Treasury Ordered to Issue Guidance on Payroll Tax Deferral
On August 8, 2020, President Trump issued four Memoranda. Each Memorandum related to different directives for relief (payroll tax, student loans, renter/homeowner assistance, and unemployment compensation). This blog focuses on the Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster.
The Memorandum grants the Department of Treasury the authority to defer payroll tax obligations for certain employees. The Memorandum is clear, “[t]he Secretary of the Treasury is hereby directed to use [their] authority to defer the withholding, deposit and payment of tax imposed by [the tax code] during the period of September 1, 2020 through December 31, 2020.”
The deferral is only available for employees whose bi-weekly paycheck, before taxes, is less than $4,000. The tax deferral shall be without penalties or interest. The Memorandum explicitly instructs the Department of Treasury to issue Guidance to implement this Memorandum.
Employers should stay tuned for updates from the Department of Treasury, as on how this payroll tax deferral will be carried out. Employers should ensure that their payroll companies are aware of this directive, and the coming Guidance that will affect paychecks.