As previously shared, President Trump signed an executive order last month directing the U.S. Secretary of the Treasury to defer the withholding, deposit and payment of the Social Security tax for pay dates paid between Sept. 1 and Dec. 31. The executive order affects workers whose biweekly pay is below $4,000 on a pretax basis.
Implementation of the executive order was delegated to the U.S. Secretary of the Treasury, and the IRS and Treasury Department released guidance on the payroll tax deferral program on Friday, Aug. 28.
In accordance with this guidance and other program guidelines, participation in the payroll tax deferral program is optional. Employers may opt out of the program by not deferring the employee portion of the Social Security tax for employees during the payroll tax deferral time period (Sept. 1 through Dec. 31).
Employers that participate in the program would be responsible for collecting the tax deferred from employees beginning in January 2021 with the entire amount collected by May 1, 2021.
Participation in the program would mean employees would see a temporary boost in their take-home pay for the remainder of the year due to less tax being withheld from their paychecks. However, employees in turn would see smaller paychecks early next year as employers withhold and pay the deferred amount to the IRS.
In essence, participation in the program would result in a double deduction of the Social Security tax for employees from January through April 2021 as the standard Social Security tax amount would be withheld for that time period in addition to the deferred amount.
After careful consideration, West Virginia University has elected to forgo participation in the payroll tax deferral program. This decision was based in part on concern of the potential detrimental impact to our employees when the repayment of Social Security tax would be collected during the January through April 2021 time period.
WVU will continue to withhold and remit to the IRS the Social Security tax from employee paychecks as normal during the time period of the payroll tax deferral program. However, the University will permit individual employees with biweekly pre-tax income of $4,000 or less who wish to participate in the payroll tax deferral program to do so. Participation will be on an individual basis and only at the request of the employee.
Employees who are interested in the program should review the FAQ document on the Tax Services website and contact Tax Services at tax@mail.wvu.edu no later than the end of day on Friday, Sept. 11.
Upon inquiry, employees will be provided with additional information, including a repayment agreement form that must be signed, notarized and returned to Tax Services before the end of day on Monday, Sept. 14. Employees who submit requests and/or notarized agreement forms after Sept. 14 will not be permitted to participate in the payroll tax deferral program.