SEMA eNews Vol. 23, No. 34, August 20, 2020

White House Issues Executive Actions on Payroll Taxes and Unemployment Insurance

By SEMA Washington, D.C., Staff

With Congress and the White House at loggerheads over the next comprehensive COVID relief bill, President Trump issued executive actions to withhold the collection of payroll taxes through the end of 2020, provide $300 per week in federal supplemental unemployment benefits, permit the deferral of student loan repayment until 2021 for federal loans and direct federal agencies to consider funding rental assistance to prevent evictions.

President Trump issued a memo directing the Treasury Department to defer the “withholding, deposit, and payment” of the payroll taxes that would otherwise be owed by employees whose pre-tax bi-weekly pay is less than $4,000 for the period of September 1 to December 31, 2020. The business community awaits guidance from the Treasury Department on whether companies will be required to implement the deferral payroll taxes or whether they will be permitted to either collect and hold or collect and remit the payroll taxes for their employees if they elect to do so. (Under the CARES Act, businesses already have the option to defer payment of the employer’s portion of social security taxes between March 27 and December 31, 2020, with half to be repaid by the end of 2021 and the other half by the end of 2022.)

Since the payroll tax is simply being deferred, not forgiven, many companies are concerned about employees understanding this distinction, or being able to pay the future obligation. While President Trump stated an intent to forgive the tax if reelected, such an action is not guaranteed since Congress would be required to pass legislation. Employers are also concerned that they could be liable if workers do not repay the taxes.

The President’s memo on enhanced unemployment compensation directs the U.S. Department of Labor to allocate existing federal disaster relief funds to provide supplemental unemployment benefits of $300 per week (states may provide an additional $100 per week to workers).

While negotiations between the White House and Congressional leaders appear to be paused at present, SEMA continues to advocate for legislation to provide businesses with targeted COVID-19 liability protections when operating under applicable public health guidelines, in addition to the creation of a second round of Paycheck Protection Program (PPP) funding for the hardest hit businesses. The association also supports the expansion of the employee retention tax credit (ERTC) and the creation of a refundable payroll tax credit for the money that businesses spend to protect their employees from COVID-19.

For more information, contact Eric Snyder at erics@sema.org.

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