On August 8, President Trump issued an executive order allowing workers who earn less than $4,000 in a two-week period to defer payroll taxes between September 1, 2020 through December 31, 2020. It is important that employers are aware of this order and that they may need to make adjustments to payroll processing beginning in September.

Per the executive order, “The Secretary of the Treasury shall issue guidance to implement this memorandum.” This guidance has not yet been issued, so there remain questions about proper compliance and implementation.

Employees may opt out of this deferral, which applies to Social Security tax. State, local, and other withholding are not eligible for deferral. Though deferral of the Social Security tax is available for employees, employers are still obligated to pay their own portion of the tax.

The deferred payment will need to be repaid, interest-free—though there is an allowance for the Secretary of the Treasurer to explore a tax forgiveness option. Terms of repayment or a timeline for repayment have not been yet been outlined. 

Read the president’s memorandum.

Please note: This letter is not intended as legal advice. ALCC is not able to provide a legally binding interpretation of the law.

Read more in this issue of Colorado Green NOW:
PPP loan forgiveness opens, but changes are anticipated
Lifescape earns a spot on the Inc. 5000 list
Welby flower trials contined in 2020--with adjustments
Cyber crimes are a real threat--is your company prepared?