Earlier this month, President Trump signed an Executive Order temporarily delaying payroll taxes paid by workers starting September 1 through the balance of 2020. However, there are many questions about this order, both for employees and employers.
Just a few of the questions involved include:
- Who decides? Since the deferral is optional, is the choice made by the employee or the employer?
- Who repays? IMPORTANT: This is a deferral, not a forgiveness – but who has to repay those taxes? It’s unclear whether this will be the employer or the employee. Either way, some entity will have a large tax bill come next April.
- How do the taxes get repaid? There is no guidance as of yet on this.
- How are non-standard employees affected? How this deferment affects employees who have fluctuating salaries; receive bonuses; who are seasonal; or who leave their job before the end of the year is still a question.
The U.S. Chamber of Commerce is working on behalf of its Member organizations and businesses throughout the country to get these and other questions answered. Right now, just remember: unless Congress acts to forgive the deferred taxes, this is a tax that WILL be collected next year. If you are an employee and choose (or your employer chooses) to defer your payroll taxes, you may be on the hook for all those funds next tax time.
Read the letter the U.S. Chamber sent to Secretary of the Treasury Steve Mnuchin