On Saturday, August 8, President Trump signed a Presidential Memorandum directing the Secretary of the Treasury to “use his authority pursuant to [Code section] 7508A to defer the withholding, deposit, and payment of the tax imposed by [Code section] 3101(a) . . . on wages . . . paid during the period of September 1, 2020, through December 31, 2020,” subject to certain conditions. (The memo as originally posted on the White House website would have applied retroactively to wages paid August 1, 2020, but was subsequently updated.) Two conditions are enumerated in the memorandum. First, the deferral applies only with respect to any employee the amount of whose wages payable “during any bi-weekly pay period generally is less than $4,000, calculated on a pre-tax basis, or the equivalent amount with respect to other pay periods.” Second, the amounts deferred shall be deferred without any penalties, interest, additional amount, or addition to the tax.
Continue Reading Trump Executive Action to Defer Employee Share of Social Security Taxes Raises Significant Legal Questions for Employers
The IRS recently released Notice 2020-46, providing favorable tax relief for “leave-based donation programs” designed to aid victims of COVID-19 pandemic. Under these programs, employees may elect to forgo vacation, sick, or personal leave in exchange for payments that the employer makes to charitable organizations described under section 170(c). Under this notice, payments employees elect to forgo do not constitute income or wages of the employees for federal income and employment tax purposes if the employer makes the payments, before January 1, 2021, to charitable organizations for the relief of victims of the pandemic. The IRS will not assert that an opportunity to make this election results in employees’ constructive receipt of the payments. Accordingly, an employer would not need to include the payments in Box 1, 3 (if applicable), or 5 of the Forms W-2 for employees electing to forgo their vacation, sick, or personal leave.Continue Reading IRS Provides Guidance on Leave Donation Programs in Response to COVID-19 Pandemic