IRS Guidance: Employee Social Security deferral

From Wipfli.

On August 28th the IRS issued Notice 2020-65 providing guidance on implementation of the August 8th presidential executive order that allows the deferral of employee social security taxes for the period September 1, 2020 through December 31, 2020.

The deferral of the employee taxes is not mandatory and employers will need to decide whether they want to opt in. The potential to defer the withholding only applies with respect to employees whose gross pay for the pay period is less than $4,000 for a bi-weekly pay period (or equivalent for other payroll periods, e.g. $2,000 for weekly payroll). No deferral is available for any payment to an employee of taxable wages of $4,000 or above for a bi-weekly pay period.

The notice allows employers to delay the withholding and deposit of the taxes until the period beginning January 1, 2021 and ending April 30, 2021. However, if employers choose to withhold payroll taxes for the period September 1, 2020 to December 31, 2020, the deposit requirements are unchanged. They are not allowed to hold the funds to see if Congress passes legislation to eliminate payment of the deferred tax, nor are they allowed to withhold taxes during September through December and not remit until January through April of next year.

See the complete post from Wipfli online.