Tax News & Views Payroll Tax Deferral and PPP Roundup

August 17, 2020

How the Executive Order to Defer Withholding of Employee Payroll Taxes Will Impact Your Organization – Angie Ziegler and Larry Evans, Eide Bailly LLP. “The recent executive order from President Trump to defer certain payroll tax obligations was part of four executive orders designed to provide additional relief due to COVID-19. Specifically, the guidance relates to the withholding, deposit and payment of the tax imposed for Social Security type taxes.”

Unfortunately, without the implementation guidance from the treasury secretary, we are left with the ability to raise good questions, but can only speculate on the answers, which is not what should be done in this case.

We will need the guidance to respond to important issues and questions, such as:

  1. Can the potential election in or out be made by an employee?
  2. Does the deferral apply to self-employed taxpayers?
  3. How is the employer protected from having to pay the tax in the future when the employee no longer works for them?
  4. How would the deferral relate to the COVID-19 legislation already in place?

Payroll Tax Memo Could Pose Trouble for PPP Loan Recipients – Jonathan Curry, Tax Notes($). “Employees who take President Trump up on his offer to defer their payroll tax obligations through the end of the year might inadvertently create headaches for their employers who took Paycheck Protection Program (PPP) loans.”

“Payroll costs” as defined for the PPP include the employee portion of payroll taxes, which are the subject of Trump’s August 8 payroll tax deferral memo. If an employer receiving a PPP loan opted to use the extended 24-week covered period for its loan, then it might not be able to include its employees' deferred payroll tax contributions in the calculation for payroll costs because the cost wouldn’t be incurred until after the covered period, explained Veena Murthy of Crowe LLP.


Due to Delays in Processing Payments Mailed to the IRS, Agency Announces Dishonored Check Penalty Relief – Ed Zollars, Current Federal Tax Developments.

“As many advisers have discovered due to clients (especially trusts) receiving notices regarding payments supposedly due on tax returns where payments had been mailed in when the return was filed at July 15, the IRS is behind in processing items mailed to the agency and that includes certain tax payments.  Due to this delay, the IRS has updated guidance on its website to provide relief for taxpayers who end up with a check being dishonored by their bank when the IRS finally gets around to processing that July 15 check.”

Deja Vu Again, and Again,… - Russ Fox, Taxable Talk. “Multiple clients of ours filed tax returns near the July 15th deadline and mailed payments to the IRS. And, as usual, these clients received IRS CP14 notices stating they hadn’t paid their taxes (when they had).”


Some TurboTax Users Say A Single Checked Box Kept Them From Getting A Stimulus Check – Rob Berger, Forbes. “Some TurboTax users are reporting that they have yet to receive a stimulus check due to a single checked box in the popular tax preparation software. The checkbox asks if the taxpayer's spouse can be claimed as a dependent by someone else.”

“Perhaps the bigger question is why this checked box would affect eligibility for the Economic Impact Payment (EIP). It's true that a person is ineligible for an EIP if they can be claimed by some one else as a dependent. But the checked box at issue asks about the taxpayer's spouse. Why a checked box in TurboTax indicating that a spouse can be claimed as a dependent by someone else would render the taxpayer ineligible for an EIP is unclear.”

COVID-19 sports consequences and gambling costs, even on the fantasy sports front – Kay Bell, Don’t Mess with Taxes. “The coronavirus pandemic has not only affected sports leagues, athletes and fans, but also gamblers and the state tax collectors that have come to rely on that related tax revenue.”

No Foreclosure Crisis In Sight But Property Tax Revenues Still Falling – Liz Farmer, Forbes. “Cities and counties are predicting a drop in their property tax revenues over the next year, a phenomenon that’s rare in recessions and never in the modern era has it occurred so quickly.”

Biden Tax Agenda Hinges on Democratic Control of SenateRichard Rubin, WSJ ($). “To finance that ambitious agenda, the Democratic presidential candidate plans to raise taxes by about $4 trillion over a decade through levies on corporations and high-income households. But winning the presidency won’t be enough to get that done. The Democratic Party also will have to win a majority in the Senate while maintaining control of the House of Representatives.”


ISIS allegedly ran a COVID-19 PPE scam site  - Andy Greenberg, Ars Technica. “The COVID-19 pandemic, and millions of people desperate for scarce protective equipment like masks and Tyvek suits, has presented a bonanza for scammers. Now, according to the US Department of Justice, it seems that even ISIS has gotten in on the game.”

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