NNA ISSUE BRIEF: Payroll tax deferrals will come due January 1, 2021
The federal Department of the Treasury has issued long-awaited guidance on how the payroll tax deferral announced on Aug. 8 will work. As expected, the tax will not be forgiven but must be paid to the federal government between January 1 and April 20, 2021. If not paid by May 1, interest and penalties will begin to accrue.
Under President Trump’s executive order, employers may opt between Sept. 1 and Dec. 31 not to withhold the employee’s share of the Social Security Tax. If the tax is not withheld, payment to the federal government does not come due.
But on January 1, employers must again begin withholding and then must pay not only that pay period’s withheld tax but must also begin to pay the tax not collected in the fall of 2020. Employers are permitted to go back to the employees to attempt to collect the tax, but it remains the employer’s obligation to pay the 2020 tax whether or not the employee is able to catch up on the deferred withholding.
The deferral option is available only for employees whose biweekly pay is less than $4,000. The full guidance document is here.
(Please note: NNA is NOT suggesting newspapers take the deferral, simply letting employers know it is an option.)