As you have probably heard in the news, President Trump signed a Presidential Memorandum deferring certain payroll tax obligations. A link to the announcement follows:
In summary, the memorandum instructs the Secretary of the Treasury to use his authority under 26 U.S.C. 7508A to defer the withholding, deposit, and payment of the employee’s portion of FICA (6.2%) for employees whose pay is generally less than $104,000 per year. The deferred taxes are not subject to penalties or interest, and the memorandum applies to the period from 1 September 2020 through 31 December 2020.
The President’s memorandum only defers the tax withholding, but most legal scholars believe that an act of Congress is required to forgive any deferred taxes. Employers may be in a tight spot unless more guidance is issued. For example, if an employer defers FICA withholding and the employee quits, is the employer liable for the tax?
Stay tuned as the situation develops.