Payroll Tax Deferral FAQs
  1. As an employer, am I eligible to offer the tax deferral to my employees?
  2. Which employees are eligible to defer their 6.2% Social Security tax?
  3. When are the deferred taxes due?
  4. Who is responsible for payment of the deferred taxes?
  5. What happens if an employee separates from service before the deferred taxes are collected?
  6. Do I as an employer have to repay the taxes?
  7. What is the impact on me as an employer?
  8. What taxes are eligible to be deferred?
  9. Should I allow my employees to defer the 6.2% Social Security tax?

As an employer, am I eligible to offer the tax deferral to my employees?

Any employer who withholds the 6.2% Social Security tax from their employees' paychecks is eligible to voluntarily defer the withholding, deposit, and payment of the tax from September 1, 2020 until December 31, 2020 on eligible checks.




Which employees are eligible to defer their 6.2% Social Security tax?

Any employee who is subject to the 6.2% Social Security tax withholding is eligible to defer withholding of the tax on any paycheck issued between September 1, 2020 and December 31, 2020 where the gross pay before any deductions is less then:

  1. $2,000 for any weekly payroll period,
  2. $4,000 for any bi-weekly payroll period,
  3. $4,333 for any semi-monthly payroll period, or
  4. $8,666 for any monthly payroll period.



When are the deferred taxes due?

Any taxes deferred under this rule must be withheld, deposited, and paid ratably between January 1, 2021 and April 30, 2021. Amounts not paid before May 1, 2021 will subject the employer to penalties and interest.




Who is responsible for payment of the deferred taxes?

Employers remain responsible for the withholding, depositing, and payment of the deferred taxes. See "When are the deferred taxes due?" for payment deadlines.




What happens if an employee separates from service before the deferred taxes are collected?

As of August 28, 2020, no guidance has been issued related to uncollected deferred taxes. IRS guidance issued in the form of a Notice on August 28 does allow for other arrangements to be made with the employee to collect deferred taxes other than ratably over the collection period of January 1, 2021 until April 30, 2021. No details of what other arrangements are allowed was given in the notice.

Nothing in the notice relieves an employer of liability from paying deferred taxes.




Do I as an employer have to repay the taxes?

Yes, the deferral is a delay in the withholding, depositing, and payment of the 6.2% employee Social Security taxes. It is not a forgiveness of the taxes which must be withheld from future employee checks and paid within a specific time frame. See When are the deferred taxes due? for more information.




What is the impact on me as an employer?

There are numerous unanswered questions related to the deferment of payroll taxes. Employers may have to adjust their payroll practices to comply with current and future guidance. Guidance may prove to be complex and costly to implement. They may also be required to pay taxes, interest and/or penalties that they otherwise would not have to pay if they choose to allow employees to defer the 6.2% of Social Security taxes.




What taxes are eligible to be deferred?

The deferral only applies to the 6.2% employee Social Security tax. The deferral does not apply to the 1.45% employee Medicare tax, federal and state income tax withholding or any employer taxes.




Should I allow my employees to defer the 6.2% Social Security tax?

This is a decision that should be made carefully. Employers should consider the administrative costs that will be involved with implementing the tax deferral and any future guidance that may be issued; the failure to withhold the deferred taxes because an employee either doesn't have enough future earnings or separates from service may subject an employer to taxes, interest and/or penalties that they would not otherwise have to pay; and that the increased tax withheld during the repayment period may be detrimental to your employees' finances among other factors.

We have no guidance on the impact of an employer's decision not to defer the 6.2% employee Social Security tax should Congress decide to enact legislation that forgives the deferred taxes.

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Bainbridge, Georgia 39817
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