[US] Employers aren’t ready for Trump’s payroll tax deferral


 
26 AUG 2020

On August 8, President Trump signed an executive order calling for a deferral of the employees’ portion of the payroll tax from September 1 until the end of the year. Employers and payroll companies have less than a fortnight to put the President’s payroll tax deferral in place. At present, it is reportedly looking like an uphill battle. The US Chamber of Commerce, payroll companies and other business associations believe it would be difficult to implement the deferral and are reportedly worried about the liability employers and employees may face.

Currently, employers and employees have shared responsibility for a 12.4 per cent levy that funds Social Security and a 2.9 per cent tax to support Medicare. Social Security taxes are subject to an annually adjusted wage cap ($137,700 for 2020), but Medicare taxes are assessed beyond that threshold. The executive order applies specifically to the Social Security tax and would affect workers whose bi-weekly pay is under $4,000 on a pretax basis. Employers and payroll companies await final guidance from the IRS on how this is to work. CNBC reports on their concerns.