President Trump Signs Executive Action Deferring Social Security Tax
On Saturday, Aug. 8, President Trump signed four executive actions meant to provide economic relief in the midst of COVID-19. In one such action, the president directed the Secretary of the Treasury to defer collection of the employee portion of the Social Security tax (6.2%). The deferral will only be available to employees that generally make less than $4,000 during any bi-weekly pay period (approximately $104,000 per year) and applies to wages paid during the period of Sept. 1, 2020, through Dec. 31, 2020.
The action does not provide any details for how to implement this directive. Instead, it states the Secretary of the Treasury will issue guidance needed for implementation. Thus, additional communication will be forthcoming once this guidance is provided.
It is important to note that this “payroll tax holiday” is only a deferral. This means that employees that choose to apply the executive action will be required to pay the deferred liability in full at the end of the deferral period. Additional guidance is needed regarding the mechanics for implementation and the related due dates for repayment of the deferred tax liability.
President Trump has expressed a desire to forgive the deferred Social Security taxes. However, it is widely believed that such forgiveness will require an act of Congress.
If you have questions, please reach out to your KSM advisor or complete this form.
Keeping you updated on COVID-19 and its impact on businesses and individuals.