In response to stalled negotiations between the House and Senate on the next round of legislative coronavirus relief, President Trump issued four Executive Orders seeking to reignite negotiations and provide some immediate relief. Trump’s action included orders to address enhanced unemployment payments, eviction moratoriums, student loan relief, as well as providing a payroll tax holiday for some. It is no secret that the Trump administration has supported a payroll tax holiday as one of the measures to provide immediate relief to workers during the COVID-19 pandemic so it was not a big surprise to see a payroll tax deferral order among the orders signed by the President this past weekend. More specifically the order calls for a deferral of payroll taxes from September 1, 2020 to December 31, 2020 for certain workers generally making $100,000 per year or less. This payroll tax deferral raises many questions for employers and their employees when it comes to what paychecks may look like through the rest of the year. Most importantly is that the President’s power under the executive order is limited to deferral of the tax and not elimination of it. Thus, it will be up to Congress to decide if the liability of taxes will merely be pushed off until after year-end or be among the benefits provided to employees as a result of future legislative actions. While the implementation of these orders is uncertain, the attached summary outlines some of the questions the new payroll tax deferral order raises and highlights the guidance that will be needed if such an order stands. We will continue to keep you informed of any new developments relating to all the pending Coronavirus stimulus efforts and look forward to some clarity as negotiations continue in the coming weeks.
Here is some additional information on this Executive Order.