New Guidelines for Deferring Payroll Tax Obligations During COVID-19 Disaster

New guidelines for deferring payroll tax obligations during COVID-19 disaster

New Guidelines for Deferring Payroll Tax Obligations During COVID-19 Disaster

New guidelines for deferring payroll tax obligations during COVID-19 disaster.  On August 8, 2020, President Trump issued a Presidential Memorandum (Notice 2020-65) directing the Secretary of the Treasury to use his authority pursuant to section 7508A of the Internal Revenue Code to defer the withholding, deposit, and payment of certain payroll tax obligations, deferring the same tax deadlines faced by employers affected by the ongoing coronavirus pandemic.

“This modest, targeted action will put money directly in the pockets of American workers and generate additional incentives for work and employment, right when the money is needed most.”[i]

What is Notice 2020-65?

Here’s a brief overview.  Beginning September 1, 2020, employers that withhold and pay employee’s Social Security tax on bi-weekly wages less than $4,000 (or an equivalent amount, for example, $2,000 if paid weekly) may defer withholding and payment of the employee’s portion of the Social Security tax starting September 1, 2020 to the pay period January 1, 2021 to April 30, 2021.  Please note, this is an opportunity to delay, it is absolutely not an opportunity for forgiveness!

Guidelines

  1. Compensation earned prior to September 1, 2020 can be included if it is paid to the employee after September 1, 2020.
  2. The $4,000 (or equivalent amount) threshold is applied on each pay period separately.
  3. The withholding due dates have changed, not the deposit timing rules once they are withheld.
  4. The deferred taxes, if this opportunity to defer is employed, will need to be withheld and paid in early 2021, the employer will be held responsible for payment of all deferred taxes ratably, not as a percentage of employee’s income. It is unclear what options the employer has if the employee leaves their employ before April 30, 2021.

Do Significant Questions Still Remain?

Yes, at time of printing, it is still unclear if these changes are voluntary or if mandatory on the part of employers.  Additional guidance is still required and expected from the IRS and Treasury as many questions are left unanswered.

Who Authored of Notice 2020-65?

The principal authors of this notice are attorneys of the Office of Associate Chief Counsel, Employee Plans, Exempt Organizations, and Employment Taxes, with the participation of staff from other offices. For further information regarding the guidance under this notice, please call the Notice 2020-65 Hotline at (202) 317-5436 (not a tollfree number).[ii]

We hope you found this article about “New Guidelines for Deferring Payroll Tax Obligations During COVID-19 Disaster” helpful.  If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page  or our website at www.GROCO.com.  Unfortunately, we no longer give advice to other tax professionals gratis.

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Alan Olsen, CPA

Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com.  GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.

Alan L. Olsen, CPA, Wikipedia Bio

 

 

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The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.

Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.

The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.

They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..

American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:

Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…

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MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness.  It’s mission statement:

In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.

Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.

[i] https://www.federalregister.gov/documents/2020/08/13/2020-17899/deferring-payroll-tax-obligations-in-light-of-the-ongoing-covid-19-disaster

[ii] https://www.irs.gov/pub/irs-drop/n-20-65.pdf

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