The IRS has just issued Notice 2020-65 providing guidance for the withholding tax deferral allowed pursuant to President Trump's executive order issued on August 8. I is, in essence, a scam. I have posted a copy of the notice here:
slnews.us/pbgl082820b
slnews.us/pbgl082820b
Neither the executive order nor the notice relieve any employer of the obligation to withhold. Employers who (i) fail to withhold and (ii) no longer employ the employee when the withholding deferral ends could find themselves liable for the amount of tax deferred and penalties.
In essence, such employers will be paying the withholding amounts twice. As the Notice rather cryptically notes:
"An Affected Taxpayer must withhold and pay the total Applicable Taxes that the Affected Taxpayer deferred under this notice ratably from wages and compensation
"An Affected Taxpayer must withhold and pay the total Applicable Taxes that the Affected Taxpayer deferred under this notice ratably from wages and compensation
paid between January 1, 2021 and April 30, 2021 or interest, penalties, and additions to tax will begin to accrue on May 1, 2021, with respect to any unpaid Applicable Taxes.
If necessary, the Affected Taxpayer may make arrangements to otherwise collect the total Applicable Taxes from the employee."
In other words, if the employee is not working at the point in time that the deferral ends, you have to pay the tax and chase the employee down for reimbursement. Good luck with that.
