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
Newsletter
February 23, 2024

Barley Snyder 2023 Year In Review

Check out what the professionals of Barley Snyder have been up to in 2023 a...

Learn More
Press Release
February 22, 2024

Barley Snyder Partner Jeremy Frey Admitted to Practice in Maryland

For Immediate Release  Hanover, Pa. – Barley Snyder is pleased ...

Learn More
Press Release
February 13, 2024

Barley Snyder Attorney Natalie Alexander Admitted to Adams County Bar Association

For Immediate Release Gettysburg, Pa. – Barley Snyder is pleased to annou...

Learn More

Other Upcoming Events

View All Upcoming Events
Apr
10
12:00 pm
-
6:00 pm
event
Location

LendiCon 2024

Learn More
May
10
8:00 am
-
5:00 pm
event
Location

41st Annual Employment Law 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