Confusion about Lost Wages and Payroll Tax Deferral is Getting Federal Attention

States and employers’ CPAs have asked for clarification regarding the recent executive orders regarding supplementing unemployment and employee tax deferrals. Concerning unemployment assistance, the federal government issued guidance to the states explaining that this will be administered by states through a grant agreement with the Department of Homeland Security’s Federal Emergency Management Agency (FEMA) and with support from the Labor Department. Expect to get more guidance from states you work in soon.

Concerning tax deferrals, President Trump’s August 8 Memorandum permitted employees to defer certain payroll tax obligations. CPAs had several questions, and one concern was whether deferring payroll tax obligations was mandatory. While not all of their questions were answered in the letter they sent, Treasury Secretary Steven Mnuchin indicated that the payroll tax deferral would not be mandatory for employers to implement, and employees can opt out.

We will be reporting on these topics as they unfold. If you have questions in the meantime, we are happy to answer them when information is available.