IRS Issues Guidance Regarding Payroll Tax Deferral
On Friday, August 28, the Internal Revenue Service (IRS) released Notice 2020-65, which offers guidance regarding the implementation of the Presidential Memorandum on the deferment of some payroll taxes.
The memorandum, which was released by the President on August 8th, called for a deferral of the employee share of social security tax (or the railroad retirement tax equivalent) due between September 1, 2020 and the end of the year. The deferral applies to employees who earn less than $4,000 (pre-tax) on a bi-weekly basis, with each pay period to be considered separately.
The IRS notice seeks to guide employers in implementing the tax deferral. In Notice 2020-65, the tax agency explains that applicable taxes not withheld during the deferment period must be paid between January 1, 2021 and April 30, 2021. After May 1, 2021, interest and penalties will begin to accrue on any unpaid amounts.
For further details, click here to read the IRS release in full.