Today, September 1, 2020, is the day that President Trump’s Executive Order for Employee Social Security Tax Deferral goes into effect. There are still a lot of unanswered questions surrounding the order. However, from what we do know, we do not recommend that the tax deferral be implemented at this time.
We contacted ADP to see if they had any further information about the deferral program and below are a few key points that they sent us:

  • The Tax Deferral will not happen automatically for employers when processing payroll. They must opt in and choose each employee that would like to participate. If your business does not process payroll through ADP, be sure to verify that your processor has the same standard.

  • Employers are not obligated to offer to defer employee Social Security taxes. This program is purely voluntary.

  • Employers cannot refund Social Security taxes withheld between September 1 and the start of the deferral if they decide to implement the program later.

  • An employee does not have the option to participate in the deferral program if the employer chooses not to participate in the program.

  • The Social Security tax not withheld from employees is still owed to the IRS. The method in which the tax is collected and from whom it is collected is still very unclear. Currently, the legal liability appears to lie with the employer. Meaning, if you do not withhold Social Security taxes from an employee and Congress does not pass legislation to forgive the deferred taxes, you are still liable for the tax owed even if the employee has since left your employment.
As we learn more details and if/when new legislation is passed, we will continue to update you. In the meantime, please do not hesitate to reach out to your CPA with questions. We appreciate the opportunity to serve you as we all continue to navigate life during COVID.


--The Team at Rader & Rader