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1 1 (September 02, 2020)

handle is hein.crs/govdbrk0001 and id is 1 raw text is: Researh SetOkc COVID-19: Presidential Order Deferring Individual Payroll Taxes Updated September 2, 2020 OnAugust 8, 2020, President Trump issued a presidential memorandum ordering the deferral of individual payroll tax obligations from September 1, 2020, through December 31, 2020. The deferral is for employees with biweekly compensation of generally less than $4,000. The memorandum directed the Secretary of the Treasury to issue guidance to implement this policy. OnAugust 28, 2020, guidance was provided in IRS Notice 2020-65. A September 2, 2020, letter to the Government Accourntability Office (GAO) asks for an expedited determination if the guidance in IRS Notice 2020-65 constitutes a rule according to the Congressional Review Act in an effort to force a congressional vote to overturn the deferral. This Insight discusses the individual payroll tax deferral outlined in the memorandum, compares this order to the business payroll tax deferral provided in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136), and addresses questions related to potential economic effects. What individual payroll taxes are affected by the order? The presidential memorandum orders deferred collection and payments of the employee portion of the Old Age, Survivors, and Disability Insurance (OASDI) payroll tax, also known as the Social Security payroll tax. The Social Security trust funds are financed by a 12.4% payroll tax on wages up to the taxable earnings base ($137,700 in 2020). The tax is split equally between employers and employees, with each paying 6.2%. Self-employed individuals pay both the employer and the employee share, or 12.4%. The deferral is applicable to employees with less than $4,000 in wages during the biweekly pay period (or equivalent amounts with respect to other pay periods). The deferral applies to the railroad retirement tax attributable to the individual Social Security tax. The memorandum and IRS Notice 2020- 65 do not specify whether the deferral applies to self-employed individuals. How does the order affect payroll tax collections? Employers collect the employee portion of the tax by deducting the tax from wages when wages are paid. Employers typically deposit payroll taxes with the Internal Revenue Service (IRS) semiweekly or Congressional Research Service https://crsreports.congress.gov INI 1488 CRS MN GHT Pre pa red .r Menbersand

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