b'LEGISLATIVEREPORTShould You Defer Payment By Ed Welch,of Workers Social Security PVA Legislative Director Taxes for the Rest of 2020?A n employer has an important$2,322 for a higher paid worker. Thesethe Internet. Unfortunately, it does not decision to make: whetherdeductions will be in addition to theaddress every potential question. What or not to defer making thenormal Social Security tax deductionshappens, for example, if an employer employee share of social security taxesfor wages. The effect will be to depressdefers paying the social security taxes for the period September 1-Decemberthe employees take-home pay in thefor a worker in 2020, but the employee 31 of this year, as encouraged byfirst few months of 2021. leaves the job before the deferred taxes President Trump. The policy is not mandatory forare paid back in 2021? Is the worker re-On August 8, President Trumpan employer. Thus, the employersponsible for the payment in that case, directed the Internal Revenue Servicecan continue to make the payroll taxor does the employer have to do so? to put in place a policy beginningpayments as before. Each employerThe Guidance Document does not say.September 1 to allow the deferral untilwill have to decide whether or not toTo summarize the old car repair December 31 of the payment of theimplement the deferral of payroll taxtelevision advertisement, the govern-employee share (6.2 percent) of socialpayments. ment is giving an employer a choice: security taxes for most workers. ThisThe IRS Guidance DocumentYou can pay me now, or you can pay can be done for employees whose(Notice 2020-65) is readily found onme later. nbiweekly taxable wages are less than $4,000 (effectively, an annual compen-sation of less than $104,000). The President described his action as one that will put money directly in the pockets of American workers right when the money is needed most.This is not a waiver of these taxes (a waiver can be accomplished only by a newly enacted statute). The payroll taxes will eventually have to be repaid, unless Congress subsequently passes a law forgiving them (an event seen as unlikely by most observers in Washington, DC).According to guidance issued by the Internal Revenue Service on August 28, the employer (not the employee) is on the hook for the repayment of the deferred taxes. The repayment must take place during the first four months of 2021. If repayment is not complete by April 30, 2021, interest and penalties are to be assessed.Presumably, to make the repay-ments during the first four months of 2021, the employer will need to make deductions from the employees wages. They could total as much as SEPTEMBER 2020FOGHORN 31'