President Trump invoked an executive order deferring the withholding, depositing, and payment by employers of the employee portion of social security taxes on August 8, 2020.
This order applies to wages paid for the period between September 1 and December 31, 2020, for employees who receive less than $104,000 per year. The President further asserted he would explore options to forgive these deferred FICA Taxes if he is re-elected.
The deferral period begins in less than one week. However, no Treasury guidance has been issued and no mechanism has been created for employees to elect or for employers to defer the employee FICA tax.
In the absence of any implementation guidance, we are left scrambling to answer employee and employer concerns:
- Is the deferral optional?
- How do employers record employee requests for deferrals?
- Is this entire topic subject to continuing legal challenges?
- Most importantly, can Washington function in the final months leading up to the election and provide proper guidance to the Tax Preparer community?
Several industry groups have sent letters to Washington requesting guidance. However, the silence is deafening.
As a tax preparer and payroll professional, Contempo HCM advises our clients not to attempt to implement the deferral of FICA Withholding Taxes until further guidance becomes available.
Which will come first, the Guidance or the Election?