Executive Memorandum on Employee Social Security Tax Deferral
This page is provided for informational purposes only and may not capture all scenarios applicable to you.
As your PEO, AdvanStaff HR will continue to neutrally support programs administratively as each employer assumes a different propensity of risk for business decisions. The choice to participate in any optional program is up to the worksite employer.
AdvanStaff HR is often asked for opinions and guidance on programs such as the Executive Order Tax Deferral Program. Based on the current elements of the program, and as currently written, we do NOT encourage employers to allow employees to defer the next three months of social security taxes until Jan, 2021. The program places a significant burden and risk to the employer to encourage, facilitate, and guarantee a short term tax LOAN to employees. Tax liability forgiveness is NOT a part of this program at this time and many employees will find it very difficult to repay taxes in 2021.
Of course, there is the small chance that the parties to this deal will find a way to “forgive” the tax deferrals. If that happens, employees will be very unhappy if they did not have the option to defer and benefit from tax forgiveness. There is no knowing how that will shake out at this point, but it is something to consider.
All employers are encouraged to seek guidance from their dedicated tax professionals, attorneys, and other trusted advisors for direction relevant to their own particular situation.
Additional Guidance provided on Friday August 28th.
Preliminary Guidance and clarification can be read here.
Summary Items are as follows:
- Who is required to repay the taxes?
- The employee must “repay” the deferred taxes during the “Repayment Period of Jan 1 – April 30, 2021.
- Participating employers are obligated to fund the tax deferrals regardless of the employees ability to repay the deferred taxed.
- The employer may only collect deferred taxes during the “Repayment Period” of Jan 1 – April 30, 2021. The employer may not collect repayment of deferred taxes at termination outside of this “repayment Period.”
- If necessary, the employer may make arrangements to otherwise collect the total Applicable Taxes from the employee.
- Interest, penalties, and additions to tax will begin to accrue on May 1, 2021, with respect to any unpaid Applicable Taxes. As stated previously, the employer is ultimately responsible repay all deferrals. As a result, the employer is responsible for any penalties or interest that may result from participation in the program.
- If necessary, the worksite employer may make arrangements to collect the total applicable taxes from the employee, otherwise the employer is responsible for the repayment of the deferred taxes.
- The determination of Applicable Wages is made on a pay period-by-pay period basis. If the amount of wages or compensation payable to an employee for a pay period is less than the corresponding pay period threshold amount, then that amount is considered Applicable Wages for the pay period, and the relief provided in this notice applies to those wages or that compensation paid to that employee for that pay period, irrespective of the amount of wages or compensation paid to the employee for other pay periods.
Company Enrollment Form
Use the form below to enroll your company in the program. Upon completion of the form, an AdvanStaff HR team member will call to confirm the enrollment for verification.