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HYPERLINK "" \l "bmc16339b7-b78a-4f25-98b4-0ee9c7de8611" \t "_blank" Federal Payroll Tax DeferralAug 18, 2020 3:02 PM ASBO InternationalEarlier this month, President Trump issued?an executive order and three memorandums, one of which would defer payroll tax obligations in light of the COVID-19 pandemic, which may be of interest to school business professionals.The payroll tax memo?directs the Secretary of Treasury "to defer the withholding, deposit, and payment of the tax imposed by?26 U.S.C. 3101(a), and so much of the tax imposed by?26 U.S.C. 3201?as is attributable to the rate in effect under 26 U.S.C. 3101(a), on wages or compensation, as applicable, paid during the period of September 1, 2020, through December 31, 2020."In layman's terms, the memo would create a short-term "payroll tax holiday" from September through December to defer federal tax withholding so employees could take home more money in their paychecks. Employees who earn less than $100,000 a year (or less than $4,000 every two weeks) pre-tax are eligible. The deferral?applies?only to the 6.2% of the employee's share of Social Security but does not apply to the 1.45% share of Medicare taxes. However, any deferred amount would still need to be paid after the period ends (but with no additional fees or penalties) unless Congress decided to take action to forgive those taxes.Note that the memo directs the Treasury Secretary to explore avenues to eliminate the obligation to pay the taxes (i.e., tax forgiveness), but tax cuts are at Congress' discretion and not at the discretion of the executive branch. Without legislative action to forgive those taxes, it is likely that employees would have to start to repay them in January. Treasury Secretary Steven Mnuchin?said that?the payroll tax deferral would not be mandatory for employers to implement, and employees can opt out of having taxes deferred to avoid receiving a tax bill next year. However, the Department of Treasury has been directed to issue guidance on implementing the memo, which remains to be seen.Please stay tuned for updates as we learn more information. ................
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