This past weekend President Trump issued an Executive Order directing the Treasury Secretary to use his authority to defer the withholding, deposit and payment of the employee’s share of the 6.2-percent Social Security tax on wages.
The deferral would apply to wages or compensation paid during the period beginning September 1, 2020, through December 31, 2020.
The deferral is only for employees whose biweekly, pre-tax pay is less than $4,000, or a similar amount where a different pay period applies. Amounts are to be deferred without any penalties, interest, additional amount or addition to the tax.
Currently this is a deferral only and not a forgiveness of the tax. Yesterday, Treasury Secretary Steven Mnuchin stated that the deferral will not be mandatory, although this could raise a variety of other issues.
The memorandum orders the Treasury Secretary to issue guidance to implement the deferral. IRS guidance is expected to be issued soon.