On August 28, 2020, the IRS acted under the authority delegated to the Department of Treasury and published implementing guidance under Notice 2020-65 ("Notice"). The Memorandum directed the Department of Treasury to act under its emergency authority to issue guidance that would allow employers to defer the withholding and payment of the employee portion of Social Security taxes. On August 8, 2020, the White House issued a Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster. Chamber of Commerce, have stated that many companies may not participate in the deferral, the federal government has announced that it will begin to defer Social Security tax from wages of federal employees that fall under the applicable threshold beginning with payments made in September 2020. While some business associations representing employers, including the U.S. Looking Ahead: The Notice leaves many unanswered questions that will have to be addressed through additional IRS guidance and revised tax returns and forms. Employers that fail to pay any outstanding amounts by May 1, 2021, may be held liable for the tax, penalties, and interest. Any tax deferred under the Notice is required to be collected and paid between January 1, 2021, and April 30, 2021. Those employers that do elect to defer may do so on certain wages paid between September 1, 2020, and December 31, 2020. The Result: Deferral under Notice 2020-65 is optional. This payroll tax deferral is different from the one provided for under the Coronavirus Aid, Relief and Economic Security Act. The Situation: On August 28, 2020, the IRS published Notice 2020-65 allowing employers to defer withholding the employee portion of Social Security tax from paychecks.
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