August 31, 2020
AN UPDATE FROM NAW GOVERNMENT RELATIONS TEAM - 8.31
Latest on the President’s Employee Payroll Tax Deferral Executive Order
On Friday evening, the Treasury/IRS finally released official guidance on the payroll tax deferral Executive Order, scheduled to take effect tomorrow, September 1st. Unfortunately, the guidance fails to address some of the concerns NAW and others expressed in our letters to Treasury and leaves critical questions unanswered.
- Clearly identifies employers as the taxpayers even though it is the employee’s portion of the payroll tax that would be deferred;
- Apparently makes the program voluntary for employers, not by clearly stating that it is but by the absence of language making it mandatory;
- Does not have any language giving employees the right to choose whether or not to participate, leaving the decision on whether to do so solely with employers;
- Would apply the tax deferral to biweekly wages of $4,000 or less, calculated on a pay period basis, apparently obligating the employer to determine for which pay periods the tax could be deferred if an employee’s pay was over $4,000 in some pay periods but under $4,000 in others;
- Requires the employer to withhold and pay any 2020 taxes deferred under this program beginning on January 1 – April 30, 2021, resulting in employees paying double the payroll tax for those four months;
- Leaves unanswered the question of how an employer handles the deferred taxes from an employee who has left the company, other than stating that “if necessary, the Affected Taxpayer may make arrangements to otherwise collect the total Applicable Taxes from the employee;” and
- Also leaves unanswered the question of who is responsible if an employer is unable to collect the deferred taxes from a former employee.
NAW is cautioning members to be very careful before deciding to participate in this program because businesses that defer their employees’ payroll taxes now will be required to withhold the deferred taxes from their employees in the first four months of 2021 – in addition to their regular withholding – leaving those employees with what would be an unanticipated reduction in take-home pay. We urge businesses to consult with your tax advisors before deciding to participate.
You can read the official guidance HERE and a Bloomberg story on the issue HERE.
Latest on the Next Congressional Pandemic Relief Package
Yesterday, White House Chief of Staff Mark Meadows drew his line in the sand on a new coronavirus relief bill, saying the Trump Administration is sticking firm with its $1.3 trillion offer as talks with Democratic leadership remain at an impasse. While negotiations between Democratic leadership and the White House are at a standstill, Senate Republicans are drafting legislation for a smaller, “skinny” coronavirus relief package. Last Friday, Senate Majority Leader Mitch McConnell told Members that the Senate would not be returning this week to vote on the measure. The Senate is scheduled to return to Washington on September 8, after Labor Day.
Latest on Economic Recovery and Re-Opening the Workplace
As the Coronavirus Pandemic continues to impact the United States economy and businesses across the nation, it can be hard to decipher how new regulations and laws may impact your business. To help you manage these issues NAW is providing information about reports, webinars and seminars that you may find useful:
From Littler Law Firm:
Facing Your Face Mask Duties – A List of Statewide Orders
As businesses reopen, face coverings are likely to remain popular as a preventative measure. This post identifies the jurisdictions where face coverings are recommended or required. To read the full story, click HERE.
Stateside Associates publishes a daily report about State and Local Government responses to the evolving situation. To read their latest report, click HERE.
We are also providing a link to a spreadsheet that includes state and local COVID-19 response information provided by MultiState Associates. To view their spreadsheet, click HERE.
Jade West, Chief Government Relations Officer
Blake Adami, Vice President-Government Relations
Seth Waugh, Associate Vice President-Government Relations
National Association of Wholesaler-Distributors
The above information and links to other information has been prepared by NAW for the general information of NAW members. It is not intended to, and does not, provide tax, legal or professional advice concerning any specific matter. You should not act on the information without first obtaining professional advice and counsel.