President Issues Four Executive Orders Including One that Defers Payroll Taxes
Over the weekend, the president issued four executive orders in response to congressional negotiators inability to agree on a bill to extend COVID-19 relief.
The four orders involve compensation to unemployed individuals, evictions, student loan relief and the most divisive – a deferral on the withholding, deposit, and payment of certain payroll taxes.
The deferral is available to employees whose pretax wages or compensation during any biweekly pay period generally is less than $4,000 calculated on a pretax basis, or the equivalent amount with respect to other pay periods.
The amounts will be deferred without any penalties, interest, additional amount, or addition to the tax for the pay periods from September 1, 2020 through December 31, 2020. The deferral applies to:
- The employee portion of the old-age, survivors, and disability insurance (OASDI) tax under Sec. 3101(a) – the 6.2% employee tax that provides for old-age, survivors, and disability insurance under the social security tax
- Railroad Retirement Act Tier 1 tax under Sec. 3201
In March, the coronavirus pandemic was declared a national emergency thereby presenting the Treasury department with the authority to delay tax payments for up to a year. The executive order directs the department to provide guidance for implementing the order and to explore ways to eliminate the obligation to pay the deferred taxes.
Stay tuned to RINA Accountants & Advisors for how this all plays out or feel free to reach out to your RINA professional with any questions or concerns.