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]

Need more information?  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.

To receive our free newsletter, contact us here.

Subscribe to our YouTube Channel for more updates.

Considerately yours,

GROCO, GROCO Tax, GROCO Technology, GROCO Advisory Services, GROCO Consulting Services, GROCO Relationship Services, GROCO Consulting/Advisory Services, GROCO Family Office Wealth, and GROCO Family Office Services.

[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

Posted in
Nick Nanton

Nick Nanton – Emmy Nominated Filmmaker

Transcript, Nick Nanton –  Emmy Nominated Filmmaker: Nick Nanton: My parents essentially said, Hey, Nick, you can have anything you want in life as long as you can earn it, because we’re just trying to hold on here. So I learned pretty young that if you could provide value to other people they would give…

Gareb Shamus

Gareb Shamus – Bringing NFTs to Super Heroes

Gareb Shamus Biography Gareb Shamus is a serial entrepreneur, visionary, and cultural catalyst who has influenced over a billion people through his businesses, communities, and relationships in the Superhero and character franchise worlds.   As the founder and publisher of Wizard magazine, Shamus created the comic book industry’s most influential voice and grew Comic Con…

Heidi Kuhn - CEO of Roots of Peace

Heidi Kuhn–Founder of Roots of Peace

Transcript, Heidi Kuhn–Founder of Roots of Peace Alan Welcome to today’s show. Can you share a little about your background with us?   Introduction of Heidi Kuhn, see bio below   Heidi When one looks back on the tapestry of our life, you know, it is those seeds that we have in common rather than…

Three Reasons the Fed is Lying About Inflation

Why would the US federal government purposely underreport or flat out lie about the current rate of US inflation?  Below are three specific reasons given during a recent interview of Robert Zuccaro, CFA, Founder & CIO of Golden Eagle Strategies. He actually cautioned about inflation last February in an earlier interview, and published his findings…