Back to News

Want to Use the New Payroll Tax Deferral? Read This First

Published on

September 4, 2020

Advertised as a “tax holiday,” businesses still need to be careful when choosing to implement President Donald Trump’s payroll tax deferral that took effect September 1.

While it sounds like a good idea to help coronavirus-plagued businesses and cash-strapped employees – companies do not need to withhold payroll taxes for the rest of the year – it comes with a stiff bill starting January 1.

The deferral is just that – a deferral. It is not payroll tax forgiveness. Employees may appreciate the extra cash through the rest of the year, but on January 1, businesses will have to not just withhold payroll tax once again, but start playing catch-up with employee paychecks to make up for the taxes that weren’t paid in this deferral period.

That’s according to the IRS and the U.S. Treasury Department, which released guidance to Trump’s August 8 executive order late last week, just days before the payroll tax deferral went into effect. It’s left some businesses scrambling to figure out how to implement the system, and questioning whether they should do it at all.

There are some conditions for companies choosing to use the tax holiday. It applies only to those employees whose bi-weekly checks are less than $4,000 ($104,000 per year). And it has not been revealed on how companies will deal with employees who leave the business during the time of deferral – companies may be on the hook for the deferred tax from those employees.

If you have any questions about the payroll tax deferral for your business, please contact me or any member of the firm’s Business Practice Group


Related News

View More News
News Alert
October 3, 2025

FinCEN’s New Reporting Requirement for Certain Residential Real Estate Transfers Postponed

On September 30, 2025, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced that i...

Learn More
News Alert
September 22, 2025

Reevaluating Succession Plans That Rely on Life Insurance in Closely Held Businesses

Lessons from Connelly v. United StatesBusiness succession planning for closely held companies often includes life insurance-f...

Learn More
News Alert
September 19, 2025

One Big Beautiful Bill: Major Changes to Qualified Opportunity Zones

On July 4, 2025, President Donald Trump signed into law legislation (H.R.1), known as the One Big Beautiful Bill Act (the “...

Learn More

Other Upcoming Events

View All Upcoming Events
Oct
14
2:30 pm
-
6:00 pm
event
Location

2025 Harrisburg Business Seminar

Learn More
Oct
30
2:30 pm
-
6:00 pm
event
Location

2025 Lancaster Business Seminar

Learn More
Nov
12
2:30 pm
-
6:00 pm
event
Location

2025 Reading Business Seminar

Learn More

Get in Touch

Our attorneys, paralegals and staff look forward to hearing from you. Please reach out to let us know how we can help.

Get In Touch
RECOGNIZED IN
Super Lawyers
Best Law Firms US News
Best Lawyers