Payroll Tax Cut

[dascpa]

Non-ProSeries question - the payroll tax cut taking effect tomorrow (Sept 1st).  Cannot find any info if it is mandatory, if any of the payroll softwares are up-to-date, etc.  Does anyone have real answers as payrolls are now due?

[Terry53029]

Here is link for official notice: https://www.irs.gov/pub/irs-drop/n-20-65.pdf

[dascpa]

I got that link, thanks.  But it doesn't tell us if it is mandatory, and I was just told by my ADP rep that they're still working it out with the IRS.  So far ADP, Paychex, Intuit Payroll, etc. are not up to date and there are payrolls to be processed for tomorrow and beyond.

[Terry53029]

The way I read it I believe it is mandatory, as it states the employer is to withhold the taxes that weren't withheld in first quarter 2021. It also says the employer can take other steps to collect from employee, and that probably means the employee isn't working  there any longer. Just an opinion, but there is a phone number to call in the notice if it effects you. I also think if the employer did not comply, some employees would be upset.

[dascpa]

Others have told me they think it's optional.  I've gotten replies from a few clients so far who wish to opt out (if they can).  They don't want the hassle of having to repay the money next year (I know there is talk of not having to repay it).  but then I wonder if it's the employee who has to make that choice.  If so getting replies from all employees in time might be impossible.

[BobKamman]

Most of us on this planet know that it is voluntary, not mandatory, and being ignored by most employers.  

[Just-Lisa-Now-]

What if the employee no longer works for  you in 2021?  How would the employer recoup the employees portion that they failed to withhold that may become due? 

[dascpa]

"Most of us on this planet...."  Your comment reeks of "attitude" that I am ignorant for asking a question that even seasoned champions on this board as well as ADP, Paychex and Intuit Payroll personnel do not have the definitive answer to.  Please limit your response to a technical answer, not a demeaning one.  I'm sorry if I'm just not as smart as you are.

[Just-Lisa-Now-]

Thanks for checking in with most of the planet Bob, you must be a well connected guy.

[abctax55]

Here's a good link on the confusing subject:

https://www.currentfederaltaxdevelopments.com/blog/2020/8/28/guidance-issued-on-deferral-of-employee...

[George4Tacks]

I really like Spidell. They send out info very quickly, so signing up for their free alerts is definitely worth the no cost. https://www.caltax.com/get-more-from-spidell/

https://www.caltax.com/news/flash-email/2020-57-employee-payroll-tax-deferrals-are-a-messy-propositi...

[dkh]

I read it as an employer choice not the employee..... 

the “Affected Taxpayer” will be the employer not the employee.

For an employer with a high employee turn over this could be disastrous.

[Just-Lisa-Now-]

Agreed...someone didnt think this through when it was written.

[BobKamman]

Most of us on this planet know who is Secretary of Treasury and follow what he says in public.   We also have some understanding of how the Constitution works.  

Mnuchin Suggests Payroll Tax Deferral Will Be Up To Employers: We Can’t Force People To Participate

https://www.forbes.com/sites/kellyphillipserb/2020/08/12/mnuchin-suggests-payroll-tax-deferral-will-...

[BobKamman]

As the United States Chamber of Commerce wrote Treasury nearly three weeks ago:

The Chamber appreciates recent reports that this EO will be optional but needs additional clarification about who elects this application.

https://www.uschamber.com/comment/us-chamber-letter-secretary-mnuchin-implementation-of-the-executiv...

The U.S. Chamber of Commerce is the world’s largest business organization representing companies of all sizes across every sector of the economy. Its members range from the small businesses and local chambers of commerce that line the Main Streets of America to leading industry associations and large corporations.

Does that qualify as “most of us”? They seem to think so.

[TaxGuyBill]

You can't force people to pay taxes either, but that doesn't mean it is legal.

What Mnunchin verbally says is not necessarily what is required.

The Chamber may appreciate "reports" that is optional, but "reports" mean nothing.  Until there is official guidance, it is still not a definitive thing.

I also think it is interesting that 7.8 billion people know what to do and follow Mnunchin, when it seems like most tax preparers in the US are not sure yet due to the lack of official guidance.