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Recent Posts:


  • Payroll Tax Deferral

  • Payroll Protection Plan - Forgiveness Guidelines

  • Paycheck Protection - UPDATE

  • PPP Loan TERM CHANGE

  • COVID-19 BUSINESS LOANS UPDATE

  • SBA - EIDL / Grant - $10,000

  • COVID-19 AND TAX RELIEF - BUSINESS

  • COVID-19 AND TAX RELIEF - FOR INDIVIDUALS




  • Payroll Tax Deferral

    Based on recent developments we would like to provide some information and guidance regarding President Trump’s Payroll Tax Deferral Memorandum and subsequent guidance issued by the IRS (Notice 2020-65).

    What is payroll tax comprised of?

    Payroll taxes are paid by both employers and employees, this is a shared burden. Both parties pay 6.2% of wages to social security (up to $137,700) and 1.45% to Medicare. The total tax Burden is equal to 15.3% of total wages (For purposes of this discussion let us omit FUTA and SUTA as they are not applicable.)

    Tax Deferral

    The Notice allows employers to temporarily suspend collecting the employee portion of Social Security (6.2%) effective September 1st to December 31st, 2020. Only employees who earn less than $4,000 bi-weekly ($104,000 annually) will be eligible to participate. Employee’s will be required to repay this portion of social security tax between January 1st – April 30th, 2021 to avoid penalties, interest and other taxes.  

    What remains unclear

    • How employers will ensure the taxes are repaid during the repayment period.
    • If employers will be given the opportunity to opt in or out of the program.
    • How the suspension will be automated per tax deposit reconciliation.
    • If Congress will ultimately forgive the tax and not require repayment.

    Note

    • If you decide to opt in, there will be a $100/month fee for JB Tax to track and report the deferred amounts. 
    • It is ultimately your responsibility as the employer to collect and make repayment to the IRS for any deferred amounts.
    • If you decide to opt in, make sure you recoup any deferred amounts prior to issuing termination paychecks or make arrangements to collect the amounts.

    What to do

    Currently, we do not recommend any changes to your current payroll process. As the treasury department becomes more transparent in the process and requirements, we will continue to update and guide clients in the process.  

    President Trump's Memo                                                                                   IRS Guidelines


    Jordy Bernhard | 09/03/2020




    Tax Due Dates