IRS ISSUES GUIDANCE ON PAYROLL TAX DEFERRAL
As we previously advised, on August 8th President Trump signed an Executive Order authorizing the deferral of certain payroll taxes for September 1 through December 31, 2020. Specifically, the Executive Order authorizes, but does not require employers to suspend the withholding and payment of the employee portion of Social Security taxes. President Trump has said that if he is re-elected, he would ask Congress to waive repayment of the deferred taxes.
On August 28th, the U.S. Department of Treasury and Internal Revenue Service (IRS) issued guidance to clarify how the tax deferral would work.
The deferral would only apply to those employees making less than $4,000 biweekly (pretax) during the period of September 1, 2020 to December 31, 2020. Eligibility is determined on a pay period-by-pay period basis, meaning that if an employee makes less than $4,000 during one biweekly pay period, the employee would be eligible for tax deferral for that pay period, even though the employee makes more than $4,000 during other pay periods.
Since this just a deferral and not a waiver of taxes owed, any taxes deferred would need to be paid at a later date — January 1, 2021 through April 30, 2021 per the IRS guidelines. After April 31, 2021, interest and penalties would accrue for deferred taxes not paid. That could mean a double withholding for the period of January 1, 2021 through April 30, 2021, which could cause a financial hardship for employees. Since the responsibility is on the employer to withhold and pay the deferred taxes, it could also mean that employers may be on the hook for paying the deferred taxes for employees that are no longer employed when payments become due.
Employers who have questions regarding this payroll tax deferral should contact their trusted tax adviser. Nevada Association of Employers (NAE) will continue to monitor this issue and keep employers informed of the latest developments. Not getting our news alerts? Sign up for our email list.
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Nevada Association of Employers (NAE) has compiled a collection of commonly used HR forms, checklists, policies, and employer guides to help Nevada businesses manage workplace compliance and HR administration.
Whether you are looking for an employment application, employee file checklist, payroll deduction form, performance appraisal form, or FLSA exemption worksheet, NAE provides resources designed to support employers with day-to-day HR operations.
These tools help employers maintain consistent documentation practices and ensure workplace policies align with federal and Nevada employment regulations.
Employers who need additional guidance on HR compliance may also benefit from services such as HR Hotline support or professional HR audits, which help identify potential compliance gaps before they become legal issues.
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NAE members can access these HR resources through the Member Portal (login required). The portal includes downloadable HR forms, customizable policies, and other templates that help employers manage employee documentation and HR procedures efficiently.
These resources are designed to work alongside other NAE compliance tools, including the HR Compliance Checklist and Employee Handbook Review services that help employers maintain legally compliant workplace policies.
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If you don’t see the HR resource you need, NAE’s HR professionals and employment law attorneys are available to help.
Members can request guidance or customized resources through services such as Legal Hotline or employment legal services, which provide expert advice on workplace compliance and HR documentation.
Contact Nevada Association of Employers to speak with our team about your HR needs.
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