On August 8, 2020, President Trump signed a Presidential Memorandum directing the Treasury Department to defer the employee’s portion of Social Security taxes due to the COVID-19 pandemic for wages paid from September 1, 2020 through December 31, 2020 (see our blog). The deferral applies only for wages less than $4,000 for any bi-weekly period, or the equivalent any other pay period.

IRS Guidance

As discussed in our earlier blog, if the Congress does not enact a permanent payroll tax cut or at least the forgiveness of deferred payroll tax, employers may still be liable for withholding and remitting deferred payroll taxes on expiry of the four-month payroll tax holiday. In our blog, we also highlighted another uncertainty employers face on the expiry of the deferral payroll tax: the payment of payroll taxes in case of employee separation.

In Notice 2020-65 (“Notice”), the IRS stated that, if necessary, employers may make arrangements to collect payroll taxes from an employee, suggesting that in case of the employee separation before April 30, 2021, the employers may withhold any deferred payroll taxes.

Please contact us at 703-525-4000 should you have any questions.

This article is for informational purposes only and does not contain or convey legal advice. Consult a lawyer. Any views or opinions expressed herein are those of the authors and are not necessarily the views of any client.