IRS Payroll Tax Deferral Guidance Puts Load on Employers - Joe Kristan, Eide Bailly. “The IRS issued guidance Friday (Notice 2020-65) on the payroll tax deferral for wages paid starting September 1. Unfortunately, the guidance leaves important questions unanswered.”
The key take away from the guidance centers on what it didn’t fully answer:
What we think we know, but aren't yet sure:
- It doesn't appear that employers are required to participate in the withholding deferral.
- Employers may make "other arrangements" to collect the deferred FICA from employees. It's not clear what this means
- Employers are apparently responsible for ponying up the taxes of employees whose FICA taxes are deferred if the employee leaves before the deferred taxes are paid.
- Self-employed taxpayers appear to get no deferral break.
IRS Payroll Tax Deferral Guidance Sparks Repayment Questions – William Hoffman, Tax Notes ($). “New IRS guidance for employers implementing President Trump’s payroll tax deferral order requires the deferred taxes to be repaid within the first four months of next year, but employers will be on their own in collecting the taxes from employees.”
“Notice 2020-65, 2020-38 IRB 1, released August 28, postpones the date by which employers must withhold and pay over some payroll taxes for workers earning less than $4,000 per biweekly pay period. Under the guidance, payroll taxes that would otherwise be withheld between September 1 and December 31 are due between January 1, 2021, and April 30, 2021.”
Related: Guidance issued on payroll tax deferral – Alistar M. Nevius, J.D., Journal of Accountancy.
Guidance Issued on Deferral of Employee OASDI Withholding Set to Begin on September 1 – Ed Zollars, Current Federal Tax Developments.
Two important questions noted in the article:
- Do I Have To Defer the Withholding? And Can I Force My Employer to Do This (or Not Do This)?
“The Notice does not explicitly answer these questions. Presumably since nowhere does it require the employer to defer withholding, an employer could elect to just continue withholding OASDI for all of its employees."
- What About Forgiveness?
“Treasury does not address forgiveness, presumably because Congress will have to take action for such a forgiveness of the deferred amount to take place. There is no assurance that Congress will take such action, or even will care to try to pass such a forgiveness provision.”
Related: Questions Remain After IRS Rolls Out Guidance On Payroll Tax Deferral – Kelly Phillips Erb, Forbes.
Draft Form 941 Issued to Add Line to Deal with Payroll Tax Holiday Employee OASDI Tax Deferral – Ed Zollars, Current Federal Tax Developments. “The IRS, following the release of guidance on the payroll tax holiday set to begin on September 1, 2020 in Notice 2020-65, has now released a draft version of a revised Form 941 to take into account the employee old age, survivor and disability insurance withholding that is deferred from September 1 to December 31.”
“The key change is found on page 3 in Part 3, line 24, which asks for the “Deferred amount of the employee share of social security tax included in line 13b.” Line 13b on page 1 currently has the deferred employer portion of social security taxes under the CARES Act, so the line on page 1 will be used to cover both types of deferred social security taxes, while line 24 will alert the IRS to the portion of the total deferral that must be paid in by May 1, 2021.”
Paycheck Protection Fraud Is Massive And Unsurprising – Peter J Reilly, Forbes.
“The Paycheck Protection Program has been something of a whirlwind as hundreds of billions were quickly shoveled out. Thousands of accountants found themselves drafted into service as loan agents - mostly unpaid agents, although that fight is continuing. And, shocking, there was fraud. Quite a bit of fraud and given how quickly the program ramped up and that over half a trillion flowed out, it is of course not shocking.”
IRS approves e-signatures for 10 tax forms, temporarily – Kay Bell, Don’t Mess With Taxes.
Driven by the need to socially distance, the IRS has authorized e-signatures on the following forms:
- Form 3115, Application for Change in Accounting Method;
- Form 8832, Entity Classification Election;
- Form 8802, Application for U.S. Residency Certification;
- Form 1066, U.S. Income Tax Return for Real Estate Mortgage Investment Conduit;
- Form 1120-RIC, U.S. Income Tax Return For Regulated Investment Companies;
- Form 1120-C, U.S. Income Tax Return for Cooperative Associations;
- Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts;
- Form 1120-L, U.S. Life Insurance Company Income Tax Return;
- Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return; and
- Form 8453 series, Form 8878 series, and Form 8879 series regarding IRS e-file Signature Authorization Forms.
The Clock Is Running Out for Amending Partnership Returns – Eric Yauch, Tax Notes ($). “ The deadline for some partnerships to file amended returns for tax years 2018 and 2019 is less than a month away, and once that expires, the centralized partnership audit regime’s procedures will apply for those years. That could result in some partners not being able to obtain a full refund, compared with what they would receive if partnerships could file amended returns under the Rev. Proc. 2020-23, 2020-18 IRB 1, deadline."
The world’s most expensive sheep has just been purchased for $490,000 – Lauren Johnson, CNN. “The lamb, named Double Diamond, had generated buzz before the Scottish National Texel sale in Lanark started, according to a news release from the Texel Sheep Society. Bidding started at 10000 guineas (about but $13,000). A bidding war drove up the price until an agreement was reached for the sheep to be shared between three farms.”
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