On Aug. 28, the Treasury Department and IRS released guidance regarding President Trump’s Aug. 8 memorandum allowing the deferment of certain payroll taxes from Sept. 1 through the remainder of 2020.
The guidance allows employers to defer withholding and paying the employee’s portion of the Social Security payroll tax until April 2021 if the employee’s wages are generally less than $4,000 during any biweekly pay period, calculated on a pre-tax basis, which amounts to roughly $104,000 annually.
There is uncertainty surrounding implementation, including what employers can do if employees leave before the end of the year and how they could legally recoup that cost. Additionally, under this guidance, employees will face a smaller paycheck for the first four months of 2021—when payroll taxes must be taken out of their paychecks twice—and may fail to plan for such an adjustment. President Trump has said he will urge Congress to repeal the payroll taxes that are being deferred, which would eliminate the need for repayment next year; however, it is uncertain whether Congress will pass legislation to repeal the taxes.
View the original memorandum or visit the COVID-19 Resources for Roofing Contractors section of NRCA’s website for more information.
