The Department of Treasury and Internal Revenue Service issued guidance on Friday, August 28th on implementing the Presidential Memorandum issued on Aug. 8, 2020, allowing employers to defer withholding and payment of the employee’s portion of the Social Security tax if the employee’s wages are below a certain amount.
Notice 2020-65, posted on IRS.gov, makes relief available for employers and generally applies to wages paid starting Sept. 1, 2020, through Dec. 31, 2020.
The notice also indicated:
Outstanding Questions:
Based on the recently released guidance, companies should carefully consider the impact to its employees and the exposure to their business. Companies may want to start the discussion around internal procedures. Clearly communicate to their employees that this is a deferral and not a tax credit and the implications of not recovering the deferral amount by 4/30/21.
Namely continues to monitor for additional clarification.
Namely does not provide legal, accounting, or tax advice. Please consult with professional counsel for any tax, accounting or legal questions.