WASHINGTON, D.C. –
In a move cheered by an organization that advocates for small businesses like independent dealerships, the U.S. Treasury Department and Internal Revenue Service released guidance late last week regarding deferment of certain payroll taxes.
The guidance stems from President Trump’s memorandum on Aug. 8 directing the Treasury Secretary of to use his authority to defer certain payroll taxes.
Officials explained the guidance allows employers to defer withholding and paying the employee’s portion of the Social Security payroll tax if the employee’s wages are below a certain amount.
The agencies said the deferral is available with respect to any employee whose wages or compensation during any bi-weekly pay period generally are less than $4,000, calculated on a pre-tax basis, or the equivalent amount with respect to other pay cycles.
The entire guidance is available here.
Organizations such as U.S. Chamber of Commerce sought this guidance from federal officials soon after Trump issued his memorandum. Neil Bradley is executive vice president and chief policy officer at the U.S. Chamber of Commerce.
“The recently issued executive order on payroll tax deferral, while well-intended to provide relief, has raised serious concerns for both employers and employees,” Bradley said in a news release a couple of days after Trump’s move.
“There remains widespread uncertainty on how businesses will implement and apply the executive order, and as American employers, workers and families work to navigate the COVID-19 crisis they need clarity not more confusion,” Bradley continued. “We urge the Treasury Department to issue clear guidance for implementing this payroll tax executive order.”
When that guidance arrived, the action drew the approval of Alfredo Ortiz, who is president and chief excutive officer of the Job Creators Network, which describes itself as a nonpartisan organization founded by entrepreneurs “who believe that many government policies are getting in the way of the economic freedom that helped make this country prosperous.”
Through a news release, Ortiz said, “A payroll tax deferral would give a lifeline to the self-employed and small businesses and would go a long way to helping Main Street. It would especially help the 26 million Americans who are self-employed and responsible for paying both the employer and employee portions of the payroll tax.
“This action would put more money in people’s paychecks, help small businesses, and accelerate the economic recovery,” Ortiz went on to say.