Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster

whitehouse.gov ^ | August 8, 2020 | President Donald J Trump

[ransomnote]

MEMORANDUM FOR THE SECRETARY OF THE TREASURY

 

SUBJECT:    Deferring Payroll Tax Obligations in Light
of the Ongoing COVID-19 Disaster

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1.  Policy.  The 2019 novel coronavirus (COVID-19) that originated in the People’s Republic of China has caused significant, sudden, and unexpected disruptions to the American economy.  On March 13, 2020, I determined that the COVID-19 pandemic is of sufficient severity and magnitude to warrant an emergency declaration under section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5207, and that is still the case today.  American workers have been particularly hard hit by this ongoing disaster.  While the Department of the Treasury has already undertaken historic efforts to alleviate the hardships of our citizens, it is clear that further temporary relief is necessary to support working Americans during these challenging times.  To that end, today I am directing the Secretary of the Treasury to use his authority to defer certain payroll tax obligations with respect to the American workers most in need.  This modest, targeted action will put money directly in the pockets of American workers and generate additional incentives for work and employment, right when the money is needed most.

Sec. 2.  Deferring Certain Payroll Tax Obligations.  The Secretary of the Treasury is hereby directed to use his authority pursuant to 26 U.S.C. 7508A to defer the withholding, deposit, and payment of the tax imposed by 26 U.S.C. 3101(a), and so much of the tax imposed by 26 U.S.C. 3201 as is attributable to the rate in effect under 26 U.S.C. 3101(a), on wages or compensation, as applicable, paid during the period of September 1, 2020, through December 31, 2020, subject to the following conditions:

(a)  The deferral shall be made available with respect to any employee the amount of whose wages or compensation, as applicable, payable during any bi-weekly pay period generally is less than $4,000, calculated on a pre-tax basis, or the equivalent amount with respect to other pay periods.

(b)  Amounts deferred pursuant to the implementation of this memorandum shall be deferred without any penalties, interest, additional amount, or addition to the tax.

Sec. 3.  Authorizing Guidance.  The Secretary of the Treasury shall issue guidance to implement this memorandum.

Sec. 4.  Tax Forgiveness.  The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.

Sec. 5.  General Provisions.  (a)  Nothing in this memorandum shall be construed to impair or otherwise affect:

(i)   the authority granted by law to an executive department or agency, or the head thereof; or

(ii)  the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b)  This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c)  This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

(d)  You are authorized and directed to publish this memorandum in the Federal Register.

 

DONALD J. TRUMP

[Diana in Wisconsin]

I just have to say - I sure don't miss the years I had to write that kind of gobbledygook (Yes, it's a WORD!) for Army Regulations, LOL!

Well Done, Mr. President. Loving ALL of your EOs today, especially THIS part:

Section 1. Policy. The 2019 novel coronavirus (COVID-19) that originated in the People’s Republic of China has caused significant, sudden, and unexpected disruptions to the American economy.

[Raycpa]

26 U.S. Code § 3101. a)Old-age, survivors, and disability insurance In addition to other taxes, there is hereby imposed on the income of every individual a tax equal to 6.2 percent of the wages (as defined in section 3121(a)) received by the individual with respect to employment (as defined in section 3121(b)).

[TLI]

Does this mean no Federal income tax, Social Security tax and Medicare tax will be deducted from my pay check gross amount?

.

[Raycpa]

26 U.S. Code § 7508A.Authority to postpone certain deadlines by reason of Presidentially declared disaster or terroristic or military actions

[Raycpa]

No just as, see post 3

[LostInBayport]

The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.

If that doesn't happen there will be some incredibly unhappy people come January. The Botoxed One might stick it to the working class once more if she keeps the House.

[xkaydet65]

You’ll still have income tax deducted. FICA is a payroll tax as is Medicare but I am unsure if Trump has stopped that. Another question... will the employer portion of FICA be collected?

[Thank You Rush]

Can someone break it down for us old folks? The codes mean absolutely nothing to us and doesn’t affect us but we still want to know what’s going on. I did payroll for years but I don’t even understand what’s changing...and I have a hunch it’s Greek to a lot of current employees:

“”to defer the withholding, deposit, and payment of the tax imposed by 26 U.S.C. 3101(a)”” ~~~ which means WHAT taxes - INCOME or FICA (Social Security) all of which get deposited to the feds or states after a payroll?? We can’t get it in English? I bet the president would have trouble deciphering the meaning of it!!!

“”The Secretary of the Treasury is hereby directed to use his authority pursuant to 26 U.S.C. 7508A to defer the withholding, deposit, and payment of the tax imposed by 26 U.S.C. 3101(a), and so much of the tax imposed by 26 U.S.C. 3201 as is attributable to the rate in effect under 26 U.S.C. 3101(a), on wages or compensation, as applicable, paid during the period of September 1, 2020, through December 31, 2020, subject to the following conditions””

[Thank You Rush]

“”You’ll still have income tax deducted. FICA is a payroll tax as is Medicare but I am unsure if Trump has stopped that. Another question... will the employer portion of FICA be collected?””

The whole thing is as clear as MUD...You see this was put out by the WH and certainly by someone who didn’t have a clue how it would apply to any employees anywhere. I would suspect that the employer portion of the FICA would be part of it also but that could get pretty messy in any payroll department. It would certainly cut down on FICA earnings being credited to employees accounts...which in turn reflects on their benefits when they apply for SS and on and on and on. A domino effect..

Just play the old bureaucratic game and put words down on a piece of paper and see what shakes out or shapes up and let others figure out what it means. Like I said in an earlier reply, it doesn’t affect myself or my husband as we’ve been retired for 20 years but I don’t live my life only being concerned how things affect us - I want everyone to get a fair shake.

[Drago]

You make $105K a year, “no soup for you!”

[CapnJack]

“The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.

If that doesn’t happen there will be some incredibly unhappy people come January. The Botoxed One might stick it to the working class once more if she keeps the House.”

To me, this means that unless legislation is passed to make the deffered payroll tax a non-obligation to people, they will get WACKED ... with a big bill sometime next year ... or they will get double payroll taxed for the first 4 months of 2021.

If this is enacted, people better look at what their payroll tax amounts to and save that money off in a Savings Account to be paid later.

[PistolPaknMama]

I understand not one word of it either!

[KarlInOhio]

26 USC 3201(a) is the 6.2% Social Security Tax. (b), which is not deferred, is the Medicare tax.

26 USC 3201 is the Railroad Retirement tax.

I don't see anything in there about the employer's half or self-employment tax which covers both the employee and employer parts.

Note that these are only deferred. According to the Memo: Sec. 4. Tax Forgiveness. The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.

So you might end up owing it all on April 15, 2021.

[Balding_Eagle]

I’ll trade you.

You can have all my soup.

I’ll have yours.

[KarlInOhio]

Yep. No phase out like the stimulus check.

I expect some people just over the limit are going to be asking for a pay cut for the next few months or working 35-39 hour weeks.

$4000 pay = $0 in SS tax.
$4000.01 pay = $248 in SS tax.

I don't know if this is after medical insurance withholding, which I don't have to pay SS taxes on.

[eyeamok]

Ok, I am self employed with 1 employee, FICA for me is 15%, my employee pays 7.5% and I pay 7.5% on his behalf, yes ALL Employers pay HALF the FICA tax for their employtee’s. So it isn’t exactly clear which portion or if all of it is going away temporarily.

[LostInBayport]

To me, this means that unless legislation is passed to make the deffered payroll tax a non-obligation to people, they will get WACKED ... with a big bill sometime next year

I took it the same way. It may be he has only the authority to defer and not to forgive the payments (Congress has the purse strings, but he can adjust when it is collected).

This is a huge risk. If he is reelected and the Democrats keep the House, they will use this to stick it to his voters. Since we work, after all.

[j.havenfarm]

I earned my soup. I’d just as soon we not squander a single
dime but if we’re going to, this business that I’m undeserving of it... a class warfare argument that republicans are now fully on board with, grows quite tiresome

[Thank You Rush]

Thanks for the time you took to look the codes up. Why would ANYONE put out anything like that for the general public when they (we) would have no idea what any of it meant? Like I said earlier, I did payroll on my jobs for years and years but never did I need to refer to or know what code covered withholding or FICA.

So the Medicare tax goes forward untouched this time around but FICA does not tho’ it will distort SS earnings?

Any self employed person who pays 100% of the FICA may or may not be included in the change?? The “someone” who wrote the order at the WH needs to lose their job. It did say it came from the WH. They could write that for the Treasury Department but for public consumption, very, very stupid!

I especially love the Railroad Retirement tax. How long has that been in place? How necessary is it today? Of course, we still have trains and someone to run them but why on earth hasn’t it been wrapped in all the other tax codes? I worked for a CPA for 10 years also and never had any client claim that on their tax return!!

Anyway - thanks...