Payroll tax exective order

[Dusty2004]

Does anyone have any information / links on what the actual order is and how it is to be implemented? I have not found much at this point.

Do employers have to do this?

Do they have to send it in?

Who will have to repay this if Congress does not agree?

Thanks,

Dusty

[MDEA]

I would not do any thing regarding this without IRS guidance.

[kathyc2]

Here's the actual text: https://www.whitehouse.gov/president...d-19-disaster/

Says Mnunchin "shall issue guidance".

[TaxGuyBill]

Until we do receive guidance, here are some of my personal opinions on the matter:

1. Employers will be required to do it. Otherwise, it doesn't really make sense if it is an optional thing.
2. Employers should keep track of the amount 'saved' by each employee, and have a contract or notification to the employees that if it is NOT forgiven, the repayment of that amount is due (a) on their first paycheck after December 31st or (b) on their final paycheck if they quit earlier.
3. There could be a reconciliation on the 1040 for the employees.
4. Congress will almost need to have it forgiven. The backlash and the effect on the economy would be bad if they don't, and it would hurt their standing in the elections if they don't have it forgiven. I think the President effectively is 'forcing' Congress to do it.

[Rapid Robert]

Employers will be required to do it. Otherwise, it doesn't really make sense if it is an optional thing.

But should employees be required to do it?

Of course it doesn't make sense, any way you look at it. And won't lawsuits put it on hold before it gets off the ground anyway?

"hurt their standing in the elections if they don't have it forgiven. I think the President effectively is 'forcing' Congress to do it."

Wouldn't Congress have until sometime after election day to make a decision?

[ATSMAN]

My clients have inquired and I told them to hold off doing anything different until final guidance is issued. We have to really be careful how we advise our clients because I can see serious issues when they have to make up the taxes not collected later on and the employee is gone!

[Scarecrow]

The authority being used to delay the employee's share of Social Security tax is IRC section 7508A, "Authority to postpone certain deadlines by reason of Presidentially declared disaster or terroristic or military actions." This code section simply says the IRS has the authority to delay for up to one year the filing and payment deadlines for certain taxes and that no interest or penalties apply during this period of delay. Nothing in this code section says the IRS can REQUIRE taxpayers to delay filing or paying their taxes. For example, when the April 15th deadline for filing and paying taxes this year was extended to July 15th, there was no requirement that all taxpayers must delay the filing and payment of their taxes. We always have had the option to file and pay our taxes prior to the filing deadline.

Thus, the IRS cannot force taxpayers to delay the payment of their social security taxes. Any guidance issued by the IRS on this subject is going to have to have an option for employees to continue to have their taxes withheld, and employers to continue to deposit the taxes that are withheld. My guess is the employee will have to be the one who decides whether or not taxes continue to be withheld from his or her wages.

[rbynaker]

Here's what they came up with (not much and it doesn't answer many questions):

https://www.irs.gov/pub/irs-drop/n-20-65.pdf

Rick

[Rapid Robert]

Thus, the IRS cannot force taxpayers to delay the payment of their social security taxes. Any guidance issued by the IRS on this subject is going to have to have an option for employees to continue to have their taxes withheld, and employers to continue to deposit the taxes that are withheld.

Well, it says:

"If necessary, the Affected Taxpayer may make arrangements to otherwise collect the total Applicable Taxes from the employee."


I wonder when we'll see a new version of Form 941?

Also, did I see something in there about the deposit obligation (versus payment of liability) not being deferred? In other words, an employer cannot withhold the employee's tax on the normal schedule, but then defer deposit until early 2021?

[kathyc2]

It took them three weeks to come up with this?

[terryats]

Dusty, here is the official notice. https://www.irs.gov/pub/irs-drop/n-20-65.pdf

[Rapid Robert]

See post #8 for a link to the IRS notice.

There is now a new draft version of Form 941, just posted yesterday. Looks like changes to Lines 13b, 24, and 25.

https://www.irs.gov/pub/irs-dft/f941--dft.pdf

[BOB W]

This is stupid from any angle....................

[Dusty2004]

Thanks all. If I read this correctly, if the employer does not withhold the SS tax from an employee they will have to withhold it in the first quarter of next year. I believe that will be a problem for employers because what if the employee is not working for the company any more they would still be liable for the money.

Am I misreading this?

Thanks,

Dusty

[Scarecrow]

Thanks all. If I read this correctly, if the employer does not withhold the SS tax from an employee they will have to withhold it in the first quarter of next year. I believe that will be a problem for employers because what if the employee is not working for the company any more they would still be liable for the money.

Am I misreading this?

That is exactly the problem. If the employee quits before the employer has time to withhold the tax, the employer is stuck with the bill. The employer derives no benefit for deferring the withholding of tax and takes all the risk for doing so.

My advice is no employer in their right mind would do this.