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Payroll Tax Deferral

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The IRS has released guidance on deferring employee Social Security tax withholding under President Trump’s executive action. The guidance in Notice 2020-65 is brief and many employers still have questions and challenges about how, and whether, to implement deferral by the start date. The optional deferral applies to wages paid from Sept. 1 through Dec. 31, 2020 for employees paid less than $4,000 during a bi-weekly pay period. It postpones (but doesn’t forgive) withholding and remittance of the employee share of Social Security tax until the period beginning on Jan. 1, 2021 and ending on April 30, 2021. Penalties, interest, and additions to tax will begin on May 1, 2021 for unpaid taxes.