Deferring Payroll Tax Obligations in Light of the Ongoing
COVID-19 Disaster – Presidential Memorandum

In August, the President of the United States signed four Executive Actions including a Presidential Memorandum to allow employees to defer certain payroll tax obligations.  The payroll tax deferral applies to the 6.2% component of the employee’s FICA tax withholding.

As of the date of this writing, the guidance on how this deferral will work is so lacking to the extent we recommend that employers continue to withhold employee social security taxes as normal.

The following are some of the areas where guidance is needed:

  • Guidance stating that the deferral is voluntary and the employee is responsible for making the election to defer
  • Guidance on when the employee can make the election and how the election can be revoked
  • Guidance providing a model notice for employers to furnish to eligible employees regarding the deferral election
  • Guidance stating which penalties are waived as a result of this deferral
  • Guidance stating that it is the responsibility of the employee and not the employer to pay the deferred payroll taxes

Point number five is especially an area of great concern and uncertainty for employers to consider.  Also the administrative complexity brought on by this provision should not be overlooked.

As noted above, we recommend that employers continue to withhold employee social security taxes as normal.

We will continue to monitor this issue and will provide updates as new information becomes available.