Trump’s Payroll Tax Deferral is Optional for Employees
After President Trump revealed an executive memorandum on Aug. 8, 2020, ordering employers to defer employees’ portion of payroll taxes until the end of 2020, taxpayers across the country have been left in a fog of confusion. The deferral program is intended to provide quick tax relief to those affected by the COVID-19 pandemic by means of temporarily pausing the collection of taxes taken out of employees’ paychecks to fund Social Security. However, lots of questions remain unanswered regarding the program.
The Internal Revenue Service (IRS) and Treasury issued a joint guidance that answered some of the basic questions about the deferral, but avoided the more pressing concerns of employees, one of the largest being whether employees have the option to opt-in or out of the program.
Kelly Morrison-Lee, an attorney with the IRS, indicated during the agency’s monthly payroll industry teleconference that the payroll tax deferral for employees is optional, resolving the ambiguity since President Trump’s announcement of the relief last month.
If you have questions about implementing the deferral in your organization, contact our tax advisors today.
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