Payroll Tax Deferal
President Trump’s “Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster”.
Two weeks ago the Internal Revenue Service (IRS) issued guidance on implementation of President Trump’s August 8 executive order to defer collection of employee payroll taxes. The guidance states that employers can defer the withholding and payment of the employee share of social security taxes (OASDI) from September 1 through December 31, 2020 for employees whose compensation for a two-week pay period is less than $4,000.
Note that the social security (OASDI) taxes deferred for the September 2020 through December 2020 time period would have to be repaid by the employee during January through April 2021, in addition to their regular OASDI withholding for wages earned during the repayment period.
The last-minute guidance has left many employers with concerns around implementation, including public universities. After the guidance was released, NACUBO cautioned colleges and universities to "consider the serious questions regarding the statutory and regulatory authority for this action, as well as the many unaddressed specifics related to its implementation and potential legal and employee relations issues that could arise from its implementation”.
After review and consultation, UC has decided not to participate in this optional program at this time.
- If you have questions regarding the paid administrative leave mentioned in President Napolitano's Executive Order issued on March 16, 2020, please check our Payroll Updates for COVID-19 page.
- Undergraduate Student Employees and their Supervisors can find updates related to COVID-19 on our Student Employment Services Webpage.
- International students who need to submit a re-verification of work authorization should contact Payroll Services via email to obtain next steps for providing documentation. Additionally, Glacier services (through UCLA) has established a temporary process for submitting updates to their systems due to COVID-19 impacts. Please visit UC Merced Tax Services to learn more about the temporary reporting process.