ASSOCIATIONINSIGHT
Portable Sanitation Association International News
BIWEEKLY EDITION SEPTEMBER 2, 2020
Page 9 Continued on page 20
After April 30, 2021, penalties, interest, and "additions to tax"
will begin to accrue on employers for tax amounts that have not
been repaid, according to the guidance.
According to The Hill, White House economic advisor Larry
Kudlow has said it is the Administration's plan to ultimately
forgive the deferral so the money doesn't have to be paid back.
However, doing so would require new legislation.
Democratic presidential nominee Joe Biden and other
Democrats have raised concerns that if these taxes are not
eventually repaid, it could imperil the Social Security fund.
What about Employees Who Leave During the Holiday?
Employers, referred to as "affected taxpayers" in the guidance, "may make arrangements to otherwise collect the
total applicable taxes from the employee," the IRS said. For instance, employers would withhold extra amounts
from employees' paycheck from January through April 2021 to make up for taxes unpaid during the suspension
period.
But if an employer suspends collection of an employee's
Social Security tax—which is 6.2 percent of his or her
pay—during the last four months of this year, to be
repaid by doubling the employee's Social Security tax to
12.4 percent during the first four months of 2021, what
happens if an employee leaves at the end of the year?
According to the IRS, the employer remains liable for the
employee's share of Social Security taxes; the due date
is just extended to next year, according to the guidance.
The employer can make repayment arrangements with the
employee, such as deducting the amount owed from the
final paycheck. Otherwise, the employer would have to
pay the balance owed.
Employer and Employee FICA Tax Relief
The new guidance addresses President Trump's
August 2020 Executive Order.
Separately, the Coronavirus Aid, Relief, and
Economic Security (CARES) Act, enacted in
March and implemented through IRS Notice
2020-22 and a series of IRS FAQs, allows eligible
employers to defer the deposit and payment
of the employer's share of Social Security FICA
taxes from March 27, 2020, through December
31, 2020. The deferred payments must be paid
back to the Treasury Department, with half due
by December 31, 2021, and the other half by
December 31, 2022.
CAUTION: The Payroll Tax "Holiday" Isn't All It Seems…Continued from page 8
