Sep 11, 2020
This podcast episode follows up one posted on Aug. 20 about
President Donald Trump’s memorandum directing Treasury to defer the
withholding, deposit, and payment of workers’ 6.2% Social Security
or Railroad Retirement tax for the last four months of 2020. Since
then, Treasury and the IRS have issued much-anticipated guidance on
just how the deferral applies and how the taxes are likely to have
to be repaid. Ed Karl, the AICPA’s vice president–Tax Policy &
Advocacy, described the memorandum in the first podcast episode.
Now he returns to describe what the guidance in Notice 2020-65
provides — and what it still leaves unclear. He has also written a
post on the AICPA Insights blog titled “Employee Payroll Tax
Deferral — Is It Workable?” that outlines what CPA advisers can
tell their business clients with employees about the deferral. What
you’ll learn from this episode: -The notice puts the responsibility
for deferring — and repaying — the taxes squarely on employers.
-Although the notice doesn’t say so directly, it is clear that
employers do not have to participate in the deferral. -The deferred
taxes must be ratably repaid in the first four months of 2021 from
wages and compensation of an employee whose payroll taxes were
deferred. But what about an employee who leaves the job before that
happens or a business that goes under? Employers “may make
arrangements to otherwise collect” the taxes from the employee. The
notice doesn’t elaborate on how they might do that, so we
hypothesize. -We assess efforts that are afoot in Congress on the
one hand to forgive the deferred taxes entirely and to overturn the
president’s memorandum on the other.