The Department of Treasury and Internal Revenue Service (IRS) has issued guidance implementing the Presidential Memorandum issued on Aug. 8, 2020, allowing employers to defer withholding and payment of the employee’s portion of the Social Security tax if the employee’s wages are below a certain amount.
Notice 2020-65, makes relief available for employers and generally applies to wages paid starting Sept. 1, 2020, through Dec. 31, 2020.
The employee Social Security tax deferral may apply to payments of taxable wages to an employee that are less than $4,000 during a bi-weekly pay period, with each pay period considered separately. No deferral is available for any payment to an employee of taxable wages of $4,000 or above for a bi-weekly pay period. This is a deferral and currently would be required to be repaid sometime next year along with the employees’ 2021 Social Security taxes.
The notice postpones the time for employers to withhold and pay employee Social Security taxes. To learn more, click here to view the IRS news release.
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