On 8/31/20 Intuit sent out a letter saying that they were still in discussions with the IRS on how to implement the Executive Order. As of 9/2/20 (which is 2 days after the order went into place) their answer was still “we will get back to you”. Here is the post.
The IRS issued a notice on 8/28/20 that did not answer all of the questions the payroll providers asked. Here is IRS notice 2020-65
The recommendations fromAccountingToday.com and SHRM.org are:
- The deferral is not mandatory
- Employer makes the election whether they will implement the deferral, not the employee
- Employers should consider whether not implementing the deferral would affect their employee relations
- Few companies are participating because of the complexity of the tracking
- This is not a “tax holiday” but rather a “deferral” of tax payments. If this program converts to a “tax holiday” everyone will benefit at that time.
Here is the article on SHRM.org
8/20/20 ORIGINAL POST
On September 1st, an Executive Order signed by the President to defer the payment of some payroll taxes is expected to become effective. Unfortunately, there are many details that have not been clarified. The AICPA sent a letter to the Treasury listing their recommendations. As of 8/19 there has been no response. The payroll providers are also waiting for guidance, because the payroll software and the IRS forms will need to be modified.
These are the key points
- The deferral is for the employee’s portion of Social Security taxes only (not the medicare) that would have been incurred between Sept 1 and Dec 31, 2020
- This is a “deferral” which means that the tax would need to be paid at a later date, although the President said that he would ask Congress to forgive the tax liability.
- If the forgiveness does not happen, the AICPA and others are concerned that the employers could be left holding the bag.
- Many are hoping that the deferral will be voluntary. Again, some are recommending that the employers make the election, others are recommending that the employees make the election.
Stay tuned for more updates. They will be rolling in at the last minute.
Here are a few resources