But guess what? That deferral isn’t going to happen on Sept. 1, because the Treasury Department still hasn’t produced the guidelines for employers and payroll processors to start offering eligible employees a chance to defer their Social Security tax.
As a result, “the deferral isn’t going to be in place for September 1st,” according to Pete Isberg, president of the National Payroll Reporting Consortium, the payroll industry’s trade association.
When might Trump’s proposed voluntary payroll tax deferral start? If ever? There’s no way to know.
The Treasury declined to comment when I asked when it plans to issue the guidelines. And Isberg told me there’s no way to tell how long it would take to vet and implement whatever guidelines Treasury comes up with.
That’s because, among other things, what Trump ordered — voluntary deferrals for employees earning less than $104,000 a year — is difficult and complex to implement.
The voluntary nature of the deferral “raises the prospect that you have to get information to 100 million people” to ask whether they want to defer the taxes, Isberg said, and then make sure the tax is deferred only for employees who want the deferral.
As things stand now, employees would be required to pay back their deferred taxes next year. It also seems that employers would be on the hook to pay the deferred taxes to the Treasury if employees (or former employees who leave between Sept. 1 and Dec. 31) fail to repay those deferred taxes.
Trump has talked about getting Congress to allow employees to keep the money permanently and has also talked about wiping out the payroll tax entirely. But there seems to be little to no chance of that happening.
As a result of all this, to quote my Post colleague Glenn Kessler:
“Roughly 30 industry groups, led by the U.S. Chamber of Commerce, described Trump’s executive action as potentially ‘unworkable,’ stressing in a letter to the Administration and top Congressional leaders that technical and logistical challenges are likely to prevent them from passing any extra income back to their employees as the President intended.
“Therefore, many of our members will likely decline to implement deferral, choosing instead to continue to withhold and remit to the government the payroll taxes required by law.”
To some people, Trump’s proposed payroll tax deferral sounds a lot like President Barack Obama’s temporary payroll tax cuts for 2011 and 2012. But it’s not.
The Obama cuts, which were approved by Congress rather than proclaimed by Obama in an executive order, were planned well and were relatively simple to implement on short notice.
They applied equally to everyone, unlike Trump’s proposed voluntary cuts; didn’t start in the middle of the year, like Trump’s would; and didn’t require people to pay them back, unlike Trump’s.
But it never occurred to me that the administration would be so inept that employees and employers willing to run the risks we’ve discussed wouldn’t be able to start their deferrals on the day Trump picked.
So it looks like Phase 1 of Trump’s Social Security venture is on hold, at least for now. I can’t wait to see what Phase 2 is like.
August 27, 2020 at 06:00PM
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Trump promised a payroll tax holiday — but so far it’s all just talk - The Washington Post
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Holiday
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