The IRS has a monthly program for tax professionals to provide information, discuss issues, and field questions. On the September 3 call, the IRS provided updated information on the presidential memorandum (“Payroll Tax Deferral Order”) that President Trump signed on August 8.
There is an IRS web page at https://www.irs.gov/newsroom/guidance-issued-to-implement-presidential-memorandum-deferring-certain-employee-social-security-tax-withholding. A FAQ section is supposed to be coming “soon”.
If you call the Notice 2020-65 Hotline at 202-317-5436 (not a toll-free number), you will hear a message that essentially says: “IRM Section 21.7.2 will be updated with this guidance. It’s not in the IRM as of today. When the IRM is updated, we’ll share that with you.”
The IRS has two telephone numbers for taxpayers to call, 800-829-1040 or 800-829-4933 and ask about this program. Some of the responses that the IRS assistor is permitted to share are:
If an employer asks if the relief provided in Notice 2020-65 is optional:
Notice 2020-65 provides employers with relief under section 7508A of the Internal Revenue Code. The relief allows employers to postpone the due date for the withholding and payment of the employee share of social security tax (or the equivalent portion of the Tier 1 RRTA tax) on certain wages. Like all relief provided under section 7508A, the relief for employers under Notice 2020-65 is optional. Employers may, but are not required, to utilize the relief.
If an employer asks if they can permit employees to opt-out or opt-in:
Notice 2020-65 does not address how an employer chooses to implement the relief in Notice 2020-65. Accordingly, nothing precludes the employer from getting employee input on whether to apply the relief to postpone the due date for the withholding and payment of the employee share of social security tax on certain wages or compensation paid to the employee.
Some questions asked on the call that the IRS hopes to get answers to:
If an employee/employer chooses to disregard this memorandum, does the employer need to have any type of signed document from the employee acknowledging withholding as usual?
Would it be acceptable for an employer, with agreement by the employee, to set up the 6.2% into a savings account (like some places do a holiday fund) that can then be used to pay the employee if it is forgiven or to offset the payout due in 2021? It defeats the purpose of getting money in their pockets but protects both the employer and employee from the variations and vagaries.
Are W-2s going to somehow be reported differently so that the employee and employer and government know how this ties out?
What happens if an employee is not working for the employer after December 31? Notice 2020-65 says: “If necessary, the Affected Taxpayer may make arrangements to otherwise collect the total Applicable Taxes from the employee.” Provide examples of what the Affected Taxpayer can do to collect the tax from the employee. If the employer is not able to collect the taxes from the employee, will the employer become liable for the taxes?
Can they be returned? If an employee continues to have social security withheld from paychecks, and the deferred amounts are later forgiven, can that employee get their social security withholding back for the forgiven period?