Trump’s payroll tax deferral nixed for House employees

It wasn’t immediately known what the Republican-controlled Senate will do.

The deferral, which is available for workers earning less than $104,000 a year, was one of several unilateral moves Trump made in August that he said would boost the coronavirus-battered economy.

But the administration has had a hard time convincing private-sector employers to take part in the plan. Companies are concerned it is too risky or complicated, especially if Congress doesn’t ultimately excuse workers from having to pay back the taxes when the deferral expires at the end of the year.

Kiko raised similar concerns, citing recent Treasury Department guidelines.

“The taxes are deferred, and absent subsequent action by Congress, employees still owe, and employers are still required to collect the taxes,” he wrote. “Starting in January of 2021, employers would be required to begin withholding taxes from paychecks at higher rates to fully collect the tax owed by April 30, 2021.”

“Like all pay disbursing officials, the CAO must weigh the benefit of the deferral against the challenges of implementing this change and the practical impacts to the House workforce.”

The administration recently announced that the deferral would be applied to the paychecks of executive branch employees and the military. They’d have to repay their obligations next year unless Congress makes the deferral permanent.

Some GOP lawmakers have said they would like to hold back payroll taxes for their staffers under Trump’s directive. Kiko’s office didn’t immediately respond when asked if his decision was binding across all House offices.

But a Democratic staffer said it removes the option for Republican lawmakers, unless they get Kiko to alter his decision or create an exception. The administrative office has total control over payroll and would have to be directly involved in any kind of deferral, the staffer said.

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U.S. House staff won’t participate in payroll tax deferral

House Speaker Nancy Pelosi, D-Calif., holds her weekly press briefing on Capitol Hill on Aug. 13, 2020.

Jim Watson | AFP | Getty Images

The U.S. House of Representatives won’t be rolling out the payroll tax deferral to its employees.

Sept. 1 was the first day of President Donald Trump’s order deferring the 6.2% employees pay toward Social Security. The so-called holiday, which applies to workers whose biweekly pay is below $4,000, is in effect until the end of the year.

The tax delay is only a deferral and not forgiveness. Congress would need to pass legislation in order to forgive the taxes.

Though private employers are expected to shy away from adopting the deferral due to its complexity, the federal government will be extending it to its employees, including military service members.  

Employees of the House, however,  won’t be deferring their 6.2% share of Social Security taxes, according to an email to staffers from Philip Kiko, Chief Administrative Officer of the House.

The chief administrative officer handles a range of functions for House employees, including payroll administration and benefits.

“After reviewing the guidance and considering the unique structure of the House, the Office of the Chief Administrative Officer, with the concurrence of the Committee on House Administration, has determined that implementing the deferral would not be in the best interests of the House or our employees,” Kiko wrote.

“As a result, we will not implement the payroll tax deferral.”

Avoiding a surprise

Employers affected by the payroll tax deferral have the burden of withholding and remitting those delayed taxes to the IRS next year.

The taxes will be withheld from workers’ paychecks ratably — or proportionally over time — from Jan. 1 through April 30, 2021.

For employees who participate, they’ll see a 6.2% boost to pay this fall, but their pay will dip early next year as their employers recoup the deferred taxes from their compensation.

This is among the reasons that employers might be chilly toward putting the payroll tax suspension into effect.

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Though employers could opt into deferral, whether employees can opt out is ultimately up to the company they work for.

Military service members, for example, won’t be able to drop out of the deferral if their wages meet the appropriate threshold, according to the Defense Finance and Accounting Service’s website. This entity provides payroll services for the Department of Defense.

The House decision to skip the deferral arrives on the heels of a push among lawmakers to allow federal employees to opt out of the tax holiday.

“While some federal employees may want to defer their payroll tax payments, unions representing federal workers have made clear that many others do not,” wrote Sen. Chris Van Hollen, D-Md., in a Sept. 8 letter to Treasury Secretary Steven Mnuchin and Office of Management and

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House Democrat offers measures to block Trump’s payroll tax deferral

A House Democrat on Friday introduced two measures in an effort to block President TrumpDonald John TrumpNetanyahu privately condoned US arms sale plan with UAE: report Trump denies report he called U.S. service members buried in France ‘losers’, ‘suckers’ Jim Carrey pens op-ed comparing Trump to Michael Corleone in ‘The Godfather’ MORE‘s initiative to defer payroll taxes.

Rep. John Larson John Barry LarsonSenate Democrats take step toward vote on overturning Trump’s payroll-tax deferral Conservatives urge Trump to take unilateral action to suspend payroll tax collection House Dems introduce bill to require masks on planes and in airports MORE (D-Conn.), the chairman of the House Ways and Means Committee’s Social Security subpanel, introduced a bill to nullify IRS guidance implementing the Social Security payroll tax deferral. He also introduced a Congressional Review Act (CRA) resolution to overturn the IRS guidance.

Larson introduced the measures along with several other lawmakers, including Ways and Means Committee Chairman Richard NealRichard Edmund NealThe Hill’s 12:30 Report: First Kennedy to lose a Massachusetts election The Hill’s Morning Report – Presented by Facebook – Markey defeats Kennedy; Trump lauds America’s enforcers in Wisconsin Neal beats back primary challenge from progressive Alex Morse in Massachusetts MORE (D-Mass.). The House members introduced the measures after Senate Democrats also launched an effort to overturn the guidance, which implements a memo Trump signed last month.

Senate Minority Leader Charles SchumerChuck SchumerSchumer calls for accountability in Daniel Prude death in Rochester Top Democrats press Trump to sanction Russian individuals over 2020 election interference efforts Fauci says he ‘would not hesitate for a moment’ to take coronavirus vaccine MORE (D-N.Y.) and Senate Finance Committee ranking member Ron WydenRonald (Ron) Lee WydenHillicon Valley: Russia ‘amplifying’ concerns around mail-in voting to undermine election | Facebook and Twitter take steps to limit Trump remarks on voting | Facebook to block political ads ahead of election Top Democrats press Trump to sanction Russian individuals over 2020 election interference efforts On The Money: Deficit to reach record .3 trillion | Senate Democrats push to overturn Trump’s payroll-tax deferral | Private sector adds 428K workers in August as job growth slows MORE (D-Ore.) on Wednesday sent a letter to the Government Accountability Office (GAO) asking for a determination about whether the IRS guidance is a rule for purposes of the CRA.

If the government watchdog determines that the guidance is a rule for CRA purposes, Senate Democrats would be able to force a vote on the Senate floor on a resolution to overturn the guidance. But the measure would face an uphill battle given the Republican majority in the chamber.

A spokesperson for Larson said there hasn’t been a response yet from GAO.

Under the IRS guidance, employers can stop withholding employee-side Social Security taxes through the end of the year for workers making under $4,000 biweekly. The money would then be collected by increasing the amount of taxes withheld from workers’ paychecks in the first few months of 2021.

The federal government is

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