We have received several inquiries about the Presidential Memorandum related to deferring social security taxes from September 1 – December 31 of this year. Under the Secretary of the Treasury’s guidance, employers are allowed to postpone withholding and payment of the employees portion of the social security tax until January 1, 2021.
We have reviewed the guidance, and received comments from a variety of sources that are experts on employer and tax rules. The general consensus among the experts we have talked to is this is a program that could be problematic for businesses like cotton gins, and that a gin should consult with their accountant and consider all potential issues before participating in this program.
An issue that comes to mind immediately is that employers will likely be responsible for collecting and paying that deferred social security tax during the period from January 1, 2021 to April 30, 2021. Full time workers will likely be unhappy when the additional funds are pulled out of their checks next year, and seasonal workers may be gone by the time the taxes are due. Of course this will not be a consideration if these deferred taxes end up being forgiven, but it is important to understand that at this point, the risks for this program seems to be born by the employer.