Important Payroll-Related Legislation Updates

Two business professional carefully checking payroll numbers

Compliance can be a tedious, complex part of human resources and can impact different part of business operations, such as payroll, workers’ compensation, benefits, and risk management. Recently, the Trump administration has provided legislation that impacts payroll taxes. Here is a timeline and pertinent information regarding updates on the presidential memorandum, IRS guidance, and resources to ensure compliance.

Saturday, August 8

President Trump issued three memoranda and an executive order regarding payroll tax, student loans, evictions, and benefits for lost wages.

The payroll tax provision directs the Secretary of Treasury to delay certain employees’ obligations to pay certain Social Security taxes. This provision is pending Treasury guidance and is applied to the September 1, 2020 through December 31, 2020 time frame.

  • It only applies to the 6.2% Social Security tax on employees.
  • It only applies to employees generally earning less than $104,000 annually.
  • It only provides a delay of the tax obligation, not forgiveness.
  • There are no penalties or interest for those who utilize the delay.
  • There is no relief for employers’ withholding obligation.
  • Employers are not required to utilize the delay.

Friday, August 21

IRS Tax Notice Error

The IRS released a press release informing a small number of employers who were sent tax notices in error due to claiming FFCRA and/or CARES Act credits used to offset taxes during the allotted period. However, the reported liabilities on Form 941 did not match the deposit reductions for every pay date. As a result, these employers received a deposit penalty tax notice.

The IRS has implemented new processes to avoid sending additional tax notices in error with regard to these tax credit claims.

At this time, the IRS has stated that employers who have received these notices in error do not need to take additional actions. To avoid future receipts of these notices, the IRS recommends checking Form 941 for reporting guidance.

Additional tax information can be found here.

Friday, August 28

The Department of Treasury and IRS issued guidance for the President memorandum released on August 8. The guidance provides relief for employers and applies to paid wages between September 1, 2020 and December 31, 2020.

This notice postpones the time for employers to withhold and pay employee Social Security taxes.

Additional COVID-19 tax relief can be found on IRS.gov.

Additional COVID-related resources can be found on the Centers for Disease Control and Prevention website.

The best way to stay up to date on legal updates is doing your due diligence by monitoring government agencies at local, state, and federal levels. Another alternative is partnering with a PEO like SBS Payroll, who provides clients monthly legal HR updates,  webinars addressing legislation and client questions or concerns, as well as maintains a COVID-19 Resources page to ensure all clients and prospects remain informed.

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