The executive order regarding Social Security payroll tax deferral that was signed on August 8th has now taken effect. Synergy is your HR partner, and it’s our job to talk you through what the new law means for your business and employees.
What Is the Law?
According to the language of executive order and IRS guidance in formal Notice 2020-65, employers have the option to defer withholding for the employee portion of Social Security tax payments from September 1st, 2020 through December 31st, 2020. This tax deferral only applies if the amount of wages or compensation paid to an employee during 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. As the law stands, these deferred tax payments will need to be paid by the employee between January 1st, 2021 and April 30th, 2021. Interest and penalties in addition to the tax due will begin to accrue in May.
What Should You Do?
While you have the option to defer employee social security payroll taxes, it does not mean you have to. There are several factors that may go into your decision.
Ultimately, the decision to participate or not is up to you and Synergy supports you either way. If you do decide to roll out this tax deferral to employees, please complete and return this election form to your Synergy HR representative. This form means you accept liability if an employee is no longer employed at the time of repayment if the IRS deems employers responsible.
If you’re not sure what to do or have questions, contact your Synergy HR representative. They’re here to discuss what might be best for your business.
Synergy is excited to be partnering with GMS, the largest privately held PEO in the country. Since 1989, countless organizations have trusted Synergy with their PEO and HR functions. This new partnership with GMS will enhance our ability to serve clients while providing the same high level of service our customers have come to know and expect.