Notice 2020-65: Implementing executive action, employment tax deferral (COVID-19)

Notice 2020-65: Implementing executive action

The IRS this evening released an advance version of Notice 2020-65 as guidance for employers with respect to a presidential memorandum directing the Treasury Secretary to use his authority to defer the withholding, deposit, and payment of certain payroll tax obligations, as relief in response to the coronavirus (COVID-19) pandemic.


President Trump on August 8, 2020, signed an executive action in the form of a memorandum directing “the Secretary of the Treasury to use his authority to defer certain payroll tax obligations with respect to the American workers most in need.” Read TaxNewsFlash


Notice 2020-65 allows employers to defer the withholding and payment of the employee share of social security tax ordinarily due during the period from September 1, 2020, through  December 31, 2020, for employees with earnings below a threshold amount. The IRS notice indicates employers that defer the withholding and payment of taxes in 2020 must withhold and pay the deferred taxes ratably over the period from January 1, 2021, through April 30, 2021.  Notice 2020-65 provides that employers may make arrangements to otherwise collect the taxes from the employee, if necessary.

IRS releases

According to a related IRS release—IR-2020-195—the employee employment tax deferral may apply to payments of taxable wages paid to an employee that are less than $4,000 during a bi-weekly pay period, with each pay period considered separately. No deferral is available for any payment to an employee of taxable wages of $4,000 or above for a bi-weekly pay period. Notice 2020-65 postpones the time for employers to withhold and pay employee social security taxes.

Notice 2020-65 [PDF 18 KB] provides that:

  • The Treasury Secretary has determined that employers that are required to withhold and pay the employee share of social security tax under section 3102(a) or the railroad retirement tax equivalent under section 3202(a) are affected by the COVID-19 emergency for purposes of the relief described in the presidential memorandum and this notice (this are “Affected Taxpayers”).
  • For Affected Taxpayers, the due date for the withholding and payment of the tax imposed by section 3101(a), and so much of the tax imposed by section 3201 as is attributable to the rate in effect under section 3101(a), on “Applicable Wages” (that is, “Applicable Taxes”) is postponed until the period beginning on January 1, 2021, and ending on April 30, 2021.
  • Applicable Wages means wages as defined in section 3121(a) or compensation as defined in section 3231(e) paid to an employee on a pay date during the period beginning on September 1, 2020, and ending on December 31, 2020, but only if the amount of such wages or compensation paid for a bi-weekly pay period is less than the threshold amount of $4,000, or the equivalent threshold amount with respect to other pay periods.
  • 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.
  • An Affected Taxpayer must withhold and pay the total Applicable Taxes that the Affected Taxpayer deferred under this notice ratably from wages and compensation paid between January 1, 2021 and April 30, 2021 or interest, penalties, and additions to tax will begin to accrue on May 1, 2021, with respect to any unpaid Applicable Taxes. If necessary, the Affected Taxpayer may make arrangements to otherwise collect the total Applicable Taxes from the employee. 

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