COVID-19, General Information, Payroll, Tax Planning & Preparation

Payroll Taxes Suspended Under Executive Order

U.S. White House, President Trump, payroll tax suspension, executive memorandum

On Saturday, August 8, 2020, President Trump issued an executive memorandum deferring certain Social Security tax obligations for certain employees from September 1 through December 31, 2020.

Citing the impacts of COVID-19 and its impact on the American economy, President Trump’s memorandum notes that the effort is to put money “directly in the pockets of American workers and generate additional incentives for work and employment, right when the money is needed most.”

As of the date of this post, guidance is still pending from the Department of Treasury; however, key provisions of the memorandum include:

  • The tax deferral applies to employees generally earning less than $104,000 annually
  • It only applies to the 6.2% Social Security tax on employees
  • No penalties or interest applies to those who use the delay
  • There is no relief with respect to employers’ withholding obligations

Currently, it is unclear whether or not employers are required to take advantage of the delay, and the memorandum does not address what employers should do if they decide to continue withholding payroll taxes. In addition, it should be noted that the memorandum only provides a delay of the tax obligation–not the forgiveness of it.

To read President Trump’s complete memorandum, click here.

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