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PayServ Service Excellence Update: Payroll Tax Deferral Executive Order

Hello Valued Client Partners!

On August 8th,  President Trump signed an Executive Order that calls for the deferral of EE Social Security tax starting September 1st, 2020 and ending on December 31st, 2020.

This particular order is relatively straight forward (When compared to most legislative items) but there are still several unanswered questions.  Our team is working with our Regulatory Specialists and awaiting initial guidelines to be issued by the IRS before taking action.

As a result of our initial review of the Executive Order, we have put together a quick “Q and A” for you to review:

Question:

What payroll taxes are affected?

Answer:

Employee Social Security tax withholding.  Per the memorandum, the tax imposed by 26 U.S.C. 3101(a) – (which reads: (a) Old-age, survivors, and disability insurance. --In addition to other taxes, there is hereby imposed on the income of every individual a tax equal to 6.2 percent of the wages,)

   

Question:

Will these taxes be forgiven, or are they only deferred to be paid back at a later date?

Answer:

The Employee Social Security tax withholding is only a deferral.  Deferral is on the withholding, deposit, and payment of the tax imposed by 26 U.S.C. 3101(a) 

   

Question:

What is the applicable period?

Answer:

Wages or compensation, as applicable, paid during the period of September 1, 2020, through December 31, 2020

   

Question:

Who participates?

Answer:

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.

   

Question:

Is every person who qualifies according to the above paragraph REQUIRED to participate in the program? And is it the employer’s decision?

Answer:

“The deferral shall be made available with respect to any employee”

 

 

Question:

Who will offer the authorizing guidance to implement this memorandum?

Answer:

The Secretary of the Treasury shall issue guidance to implement this memorandum.

 

 

Question:

Is there a possibility that this tax deferral will be forgiven and not have to be paid back?

Answer:

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.


We will send additional communication once guidelines are released and go the distance to support each of our Client Partners.

If you have any suggestions regarding how we could better assist you, please don’t keep it a secret.  Let us know, comment on your exit surveys through Support Bench or call me directly - 260-433-2601.

Sincerly,
Todd Saylor
CEO, Vision and Action Leader

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