I assume we'll be hearing from Sage very soon?
8-28-20
Guidance issued on payroll tax deferral
Late on Friday, the IRS issued much-anticipated guidance on the payroll tax deferral that was ordered by President Donald Trump in a presidential memorandum on Aug. 8 (Notice 2020-65). The notice allows employers to defer withholding on affected employees' compensation during the last four months of 2020 and then withhold those deferred amounts during the first four months of 2021
Under the guidance, employers can defer the withholding, deposit, and payment of certain payroll taxes on wages paid from Sept. 1 through Dec. 31, 2020. The deferral applies to the employee portion of the old-age, survivors, and disability insurance (OASDI) tax under Sec. 3101(a) and Railroad Retirement Act Tier 1 tax under Sec. 3201. The due date for withholding and payment of these taxes is postponed until the period beginning Jan. 1, 2021, and ending April 30, 2021.
The deferral applies to any employee whose pretax wages or compensation during any biweekly pay period generally is less than $4,000. The notice defines applicable wages, for these purposes, as:
wages as defined in [Sec.] 3121(a) or compensation as defined in [Sec.] 3231(e) paid to an employee on a pay date during the period beginning on September 1, 2020, and ending on December 31, 2020, but only if the amount of such wages or compensation paid for a bi-weekly pay period is less than the threshold amount of $4,000, or the equivalent threshold amount with respect to other pay periods.
Amounts excluded from wages or compensation under Secs. 3121(a) or 3231(e) are not included when determining applicable wages.
Under the notice, the determination of applicable wages is to be made on a pay-period-by-pay-period basis - meaning that if the amount of compensation payable to an employee for a particular pay period is less than the threshold amount ($4,000 for biweekly pay periods), then the payroll tax deferral applies to that compensation, irrespective of the amount paid to that employee in other pay periods.
The notice requires affected employers to withhold and pay the deferred taxes from wages and compensation paid during the period between Jan. 1, 2021, and April 30, 2021. Interest, penalties, and additions to tax will begin to accrue on unpaid taxes starting May 1, 2021. The notice says, that, if it is necessary, employers can "make arrangements to otherwise collect the total Applicable Taxes from the employee" but does not provide details on that requirement.
The AICPA, in a letter to Treasury and the IRS on Aug. 12, asked for guidance on many open issues regarding the implementation of the presidential memorandum.
For more news and reporting on the coronavirus and how CPAs can handle challenges related to the pandemic, visit the JofA's coronavirus resources page.
For tax-related resources, visit the AICPA's COVID-19: Tax resources page.
- Alistair M. Nevius, J.D., (Alistair.Nevius@aicpa-cima.com) is the JofA's editor in chief, tax.
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Brett Zimmerman
Net at Work
Greater Boston Area
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Original Message:
Sent: 08-14-2020 19:52
From: Jeff Schwenk
Subject: September 1 Payroll Tax Relief declaration
It is Friday!!! Drinking at the home office begins with a breakfast jolt of joe. Put the phone on DND and enjoy life. From the partner call, it sounded as if you needed to be on your third glass of vino to maintain.
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Jeff Schwenk
FORMER 90M Board Member
Bottomline Software, Inc.
Waynesboro VA
540-221-4444
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Original Message:
Sent: 08-14-2020 17:45
From: Doug Higgs
Subject: September 1 Payroll Tax Relief declaration
@Phil McIntosh Who are you kidding? I know the day drinking is starting at 3 pm.
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Doug Higgs
Midwest Commerce Solutions, Inc
(312) 315-0960
Assistant to the Traveling Secretary
Original Message:
Sent: 08-14-2020 17:43
From: Phil McIntosh
Subject: September 1 Payroll Tax Relief declaration
No need, the "new normal" is disorienting enough all by itself:-)
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Phil McIntosh
President
Friendly Systems, Inc.
Asheville NC
678.273.4010 ext 5
Original Message:
Sent: 08-14-2020 16:29
From: Larry Bradford
Subject: September 1 Payroll Tax Relief declaration
@Phil McIntosh, drinking early today?
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Larry Bradford
Accounting Technology LLC Consultant and Owner
Accounting Technology, LLC
Fairfax VA
703-913-3500
Original Message:
Sent: 08-14-2020 16:22
From: Phil McIntosh
Subject: September 1 Payroll Tax Relief declaration
SciFi plot for a Friday afternoon: Under contract with the IRS, Google builds a national (required) payroll and tax filing service to mange all this crap, cause they could get the changes done fast enough. And since they know so much about all of us, tax cheating would quickly become obsolete...
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Phil McIntosh
President
Friendly Systems, Inc.
Asheville NC
678.273.4010 ext 5
Original Message:
Sent: 08-14-2020 14:28
From: Larry Bradford
Subject: September 1 Payroll Tax Relief declaration
Was thinking all of the same.
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Larry Bradford
Accounting Technology LLC Consultant and Owner
Accounting Technology, LLC
Fairfax VA
703-913-3500
Original Message:
Sent: 08-14-2020 13:53
From: Sue Bennett
Subject: September 1 Payroll Tax Relief declaration
I forgot to mention that the decision as to whether those payroll taxes are going to be deferred or whether they'll be "forgiven" is really complicating the situation as well. Can you imagine what a payroll nightmare that will be if the taxes are really just deferred, and employees will have to pay those back next year? Not sure how anyone is going to track that, or calculate how much of each paycheck goes to the deferred amount and over what period of time. Nighmare!
Sue Bennett | President
Bennett/Porter & Associates, Inc.
P. 503 620 3484 | F. 503 620 2765
12559 SW 69th Ave | Portland, OR 97223
Email address | www.benpor.com
Bennett/Porter Blog | facebook | twitter
The information in this email and any attachments is considered confidential. This information may be subject to legal, professional, or other privilege. It must not be disclosed to any person without our authority. If you are not the intended recipient you are not authorized to and must not disclose, copy, distribute, or retain this message or any part of it. Please return this message to the sender immediately and delete any and all copies from your system.
Original Message:
Sent: 8/14/2020 12:57:00 PM
From: Sue Bennett
Subject: RE: September 1 Payroll Tax Relief declaration
I think that Tom Target is right – the software companies are no doubt investigating how they would accommodate FICA not being withheld, but I think they're also waiting for the politics to be settled (the legality of the executive order) before they actually do anything. If they decide it was legal, software companies are going to have to act pretty quickly since September 1st is right around the corner...
Sue Bennett | President
Bennett/Porter & Associates, Inc.
P. 503 620 3484 | F. 503 620 2765
12559 SW 69th Ave | Portland, OR 97223
Email address | www.benpor.com
Bennett/Porter Blog | facebook | twitter
The information in this email and any attachments is considered confidential. This information may be subject to legal, professional, or other privilege. It must not be disclosed to any person without our authority. If you are not the intended recipient you are not authorized to and must not disclose, copy, distribute, or retain this message or any part of it. Please return this message to the sender immediately and delete any and all copies from your system.
Original Message:
Sent: 8/14/2020 12:24:00 PM
From: Thomas Rogers
Subject: RE: September 1 Payroll Tax Relief declaration
Haven't seen anything. I'm not sure anyone even fully understands it yet or whether it's going to stick. The business of it being only for people making less than a certain amount is going to get confusing fast.
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Thomas Rogers (TomTarget)
Target System Technology, Inc.
Spokane Valley WA