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Treasury Department Clarifies Payroll Tax Deferral Executive Order
September 09, 2020


All information in this COVID-19 Response Resource issue is effective as of September 9, 2020.

As you know from our COVID-19 Response Resources newsletter update last week, in August, President Trump signed an Executive Order encouraging employers to defer withholding the employee portion of Social Security taxes through Dec. 31, 2020.

The Treasury Department issued guidance regarding the Executive Order on Aug. 28, 2020. The guidance did not clearly state whether the withholding deferral was mandatory or discretionary. As we discussed in our update last week, it was our view that the withholding deferral was likely to be considered discretionary and not mandatory. Now, the Internal Revenue Service (IRS) has confirmed that interpretation.

On Sept. 3, 2020, IRS attorney Kelly Morrison-Lee stated that the Social Security deferral is optional, not mandatory, on the part of employers. Morrison-Lee indicated that “employers, and not employees,” have the controlling choice to implement the deferral. As such, employers are not obligated to implement the deferral, even if requested by employees.

For questions regarding deferral of withholding of Social Security taxes, contact Sean Monson by calling (801) 663-3336 or email Smonson@parsonsbehle.com.  

 

 

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