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.
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:
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