SHRM : 1.5
On Aug. 28, the IRS issued Notice 2020-65, allowing employers to suspend withholding and paying to the IRS eligible employees’ Social Security payroll taxes. But many questions employers have raised were left unanswered.
The payroll tax “holiday,” or suspension period, runs from Sept. 1 through Dec. 31, 2020, and applies only to employees whose wages are less than $4,000 for a biweekly pay period, including salaried workers earning less than $104,000 per year.
Companies that suspend the collection of employees’ payroll tax would collect additional amounts from workers’ paychecks from Jan. 1 through April 30 next year to repay the tax obligation.
It remains uncertain, however, how many private-sector employers will suspend collection of their employees’ Social Security taxes, and if they decide to do so when they could reasonably adjust their payroll systems to stop withholding these taxes.
Employers that use a payroll firm should look for announcements on how the tax holiday will work, including any notices to employees. Given that many September payrolls were already processed in the closing weeks of August, before the guidance came out, “generally it will be shortly after Sept. 1” before Social Security tax withholding could be deferred.
Employers that maintain their own payroll systems may need weeks or months to get the technical work done, so it may be October, November, or even later.
Margie Faulk is a senior level human resources professional with over 15 years of HR management and compliance experience. A current Compliance Advisor for HR Compliance Solutions, LLC, Margie, has worked as an HR Compliance advisor for major corporations and small businesses in the small, large, private, public, Non-profit sectors and International compliance. Margie has provided small to large businesses with risk management strategies that protect companies and reduces potential workplace fines and penalties from violation of employment regulations. Margie is bilingual (Spanish) fluent and Bi-cultural. Margie’s area of expertise includes Criminal Background Screening Policies and auditing, I-9 document correction and storage compliance, Immigration compliance, employee handbook development, policy development, sexual harassment investigations/certified training, SOX regulations, payroll compliance, compliance consulting, monitoring US-based federal, state and local regulations, employee relations issues, internal investigations, HR management, compliance consulting, internal/external audits, and performance management. Margie’s unique training philosophy includes providing free customized tools for all attendees. These tools are customized and have been proven to be part an effective risk management strategy. Some of the customized tools include the I-9 Self Audit. Correction and Storage program, Ban the Box Decision Matrix Policy that Employers can provide in a dispute for allegations, Family Medical Leave Act (FMLA) Compliance Guide, Drug-Free Workplace Volatile Termination E-Book and other compliance program tools when attendees register and attend Margie’s training. Margie holds professional human resources certification (PHR) from the HR Certification Institution (HRCI) and SHRM-CP certification from the Society for Human Resources Management. Margie is a member of the Society of Corporate Compliance & Ethics (SCCE).