Treasury, IRS offer clarification on employment tax deferral ordered by President Trump Posted by AVCU on 8:15 AM

 The Treasury Department and the Internal Revenue Service (IRS) Friday released guidance to clarify the implementation of an executive order allowing employers to defer withholding and payment of an employee's portion of the payroll tax if the employee's wages were below a certain amount. The executive order was issued by President Donald Trump Aug. 8.

The Treasury and IRS clarified that this deferment applies to wages paid starting Sept. 1 through Dec. 31, 2020. The due date for withholding and payment of the tax is postponed until Jan. 1, 2021; all withheld taxes are still required to be paid on time in 2021.

In addition, the deferral of the employee payroll tax may apply to payments of taxable wages 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 of taxable wages of $4,000 or above for a bi-weekly pay period, the guidance states.

For more information on this topic, NAFCU Vice President of Regulatory Compliance Brandy Bruyere tackled the Presidential Memorandum in a recent Compliance Blog post. An upcoming blog post will further review the new guidance.

NAFCU will continue to monitor tax relief related to the coronavirus pandemic and alert credit unions of updated guidance as it is released.

Visit the IRS website for additional information on available pandemic-related tax relief.