Treasury released “guidance” Friday night to clarify President Trump’s August 8th executive order pertaining to the “deferral of employees FICA tax withholding” during the pay period September 1-December 31, 2020. Below is a “link” to a Forbes article about the Treasury’s Friday night guidance, which AccuPay agrees with both the discussion and the conclusions offered by the Forbes author. A one line summary of the “guidance” is that employers will be required to pay to the IRS, during the period January 1-April 30, 2021, the employee FICA taxes deferred for the last 4 months of 2020—–so the employer will be obligated to pay all deferred employee taxes, whether collected from employees or not, by April 30, 2021. Penalties and interest will be imposed on employers for any payment of deferred tax withholdings from 2020 paid after the April 30, 2021 deadline in the Treasury notice. Putting a conclusion in crystal clear language is that “the employer is on the hook” for deferred taxes—-the IRS will look to employers, not employees, for repayment of the deferred FICA taxes deferred from 2020 into 2021.
A more complete explanation of the executive order, the background details, links to both the Order and the Treasury guidance and the Forbes’ author’s commentary is included in the Forbes article.
AccuPay will continue to follow developments of this matter and inform you of what we find and our interpretations during the next few weeks. Our previous PayDay on this subject matter asked employers who choose to implement the FICA tax deferral effective in September to instruct us in writing of your choice to implement the FICA tax deferral—–PLEASE EMAIL YOUR PROCESSOR OR email@example.com IF YOU WISH TO IMPLEMENT THE FICA TAX DEFERRAL. As of Friday before the Treasury guidance was published, none of our employer-clients (approx 1,000) had instructed us to implement the FICA tax deferral (just in case you are wondering what other employers are doing!!) AccuPay is the “agent” for employer decisions impacting payroll/taxes and will implement your instructions to the best of our abilities.