Hey Compliance Warriors!
The Department of Treasury and Internal Revenue Service today issued guidance implementing the Presidential Memorandum issued on Aug. 8, 2020, allowing employers to defer withholding and payment of the employee’s portion of the Social Security tax if the employee’s wages are below a certain amount.
Notice 2020-65, posted today on IRS.gov, makes relief available for employers and generally applies to wages paid starting Sept. 1, 2020, through Dec. 31, 2020. Read on…The notice issued today allows, but does not require, employers to postpone payroll taxes for the period starting September 1, 2020 and ending December 31, 2020. Employers would then be required to basically double withhold (and deposit) social security tax between January 1, 2021 and April 30, 2021.
The employee Social Security tax deferral may apply to payments of taxable wages to an employee that are less than $4,000 during a bi-weekly pay period, with each pay period considered separately. No deferral is available for any payment to an employee of taxable wages of $4,000 or above for a bi-weekly pay period. This translates to an annualized salary of below $104,000 a year (26 pay bi-weekly pay periods each year).
Read the entire notice here: https://www.irs.gov/pub/irs-drop/n-20-65.pdf
As always, be safe and Be Audit-Secure!