IRS Issues Guidance for Deferral of Certain Employee Payroll Tax in Light of the Ongoing COVID-19 Pandemic
On Friday, August 28, 2020, the IRS issued a news release announcing that Notice 2020-65 had been issued to provide guidance to implement the Presidential Memorandum issued on August 8, 2020. This memorandum allows employers to defer withholding and payment of the employee’s portion of the Social Security tax if the employee’s wages are below a certain amount.
The employee Social Security tax deferral may apply to payments of taxable wages to an employee that are less than $4,000 during a bi-weekly pay period, with each pay period considered separately. 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 relief available for employers generally applies to wages paid starting September 1, 2020, through December 31, 2020. Any withholding deferred under the notice must be withheld ratably from wages paid between January 1, 2021 and April 30, 2021. The guidance allows employers to defer withholding and paying the tax, but it does not require employer participation.
For additional questions regarding the implementation of the deferral, please contact your BMSS professional.