IRS guidelines put employers on the hook for Trump’s payroll tax break – By Darla Mercado (CNBC) / Aug 29 2020
- On Aug. 8, President Trump signed an executive order calling for a deferral of the employees’ portion of the payroll tax from Sept. 1 through the end of the year.
- The IRS released guidance on the tax deferral on Friday night – four days before the deferral is supposed to take effect.
- Tax professionals are skeptical of the guidance and say it places too much liability on the employer. Deferred taxes ultimately must be paid by April 30, according to the guidance.
The IRS issued long-awaited guidance on President Donald Trump’s payroll tax deferral Friday night. And it appears to put the onus on employers to collect any taxes due after the holiday ends.
The president signed an executive order on Aug. 8 calling for a deferral of the employees’ portion of the payroll tax from Sept. 1 through the end of the year.
Currently, employers and employees share responsibility for a 12.4% levy that funds Social Security and a 2.9% tax to support Medicare.
Social Security taxes are subject to an annually adjusted wage cap ($137,700 for 2020), but Medicare taxes are assessed beyond that threshold.
The executive order applies specifically to the Social Security tax and would affect workers whose bi-weekly pay is less than $4,000 on a pretax basis.
Continue to article: https://www.cnbc.com/2020/08/28/irs-rules-on-trumps-payroll-tax-cut-put-firms-on-the-hook-for-taxes.html
