On Aug. 8, 2020, President Trump issued a Presidential Memorandum to defer the withholding, deposit, and payment of certain payroll tax obligations. The Memorandum directed the Secretary of the Treasury to defer the withholding on wages for the period Sept. 1, 2020 to Dec. 31, 2020 subject to two conditions:
- Deferral applies to employees earning wages of $4,000 or less during a bi-weekly pay period, or equivalent amounts for other pay periods and
- Amounts deferred are not subject to any penalties, interest, or addition to the tax.
In addition, the Memorandum said the Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred. As directed by the Memorandum, the Internal Revenue Service issued Notice 2020-65 (IRS Notice) on Aug. 28, 2020.
On Sept. 3 the IRS confirmed the payroll tax deferral is optional. “Employers may, but are not required, to utilize the relief,” Kelly Morrison-Lee, an attorney with the Internal Revenue Service, said during the agency’s monthly payroll industry teleconference. This clears up any uncertainties that were presented after the Presidential Memorandum was released.
Payroll Tax Deferral Details
The IRS Notice said employers that are required to withhold and pay the employee share of social security tax (Affected Taxes) are affected by the COVID-19 emergency for purposes of the Memorandum and the IRS Notice (Affected Taxpayers). For such Affected Taxpayers, the due date for withholding and payment of employee Social Security taxes on Applicable Wages is postponed until the period beginning Jan. 1, 2021 and ending on April 30, 2021. Applicable Wages are defined as wages or compensation paid on a pay date beginning on Sept. 1, 2020 and ending on Dec. 31, 2020, but only if the bi-weekly pay is less than $4,000 or an equivalent amount of other pay periods. The determination of Applicable Wages is made on a pay-period by pay-period basis. Thus, an employee may be subject to deferral in one pay period and not another.
An Affected Taxpayer must withhold and pay the total Applicable Taxes deferred between Jan. 1, 2021 and April 30, 2021 or interest, penalties, and additions to tax will begin to accrue. If necessary, the Affected Taxpayers may make arrangements to collect the total Applicable Taxes from the employee.
Before the guidance, the US Chamber of Commerce said many companies will likely continue to withhold payroll taxes because it would create a large tax bill for employees. The IRS Notice leaves some questions unanswered including what employers should do if employees quit before the end of the year.
Please consider this carefully, at the present time this is a deferral only. Amounts you do not withhold from an employee paycheck from Sept. 1, 2020 to Dec. 31, 2020, will result in these amounts being withheld along with normal payroll taxes and being remitted from Jan. 1, 2021 to April 30, 2021.
For further information regarding the payroll tax deferral or any other tax concerns, contact one of our tax advisors.

Featured Client Testimonials
Barnes Wendling has provided us guidance and recommendations that have strategically helped strengthen our business and position ourselves for growth. We needed to hire a new VP of Finance and Controller this past year, and they were instrumental in helping us find the best candidates for our company.
Sara Blankenship - President, Kaufman Container

Featured Client Testimonials
We value the trust, accuracy of information, and reliability of Barnes Wendling and Mike Essenmacher personally. Mike has been instrumental as a trusted advisor on accounting, tax, and personnel issues. His advice is always accurate, and he is very reliable. His associates are also very talented.
Dominic Ozanne - President and CEO, Ozanne Construction Company

Featured Client Testimonials
We value Barnes Wendling’s expertise with all things accounting so we can operate our business using our strengths and allowing them to be our experts. They have also brought me a few business sale opportunities to allow me to grow my assets.
John Gaydosh - President and Metallurgical Engineer, Ohio Metallurgical Service

Featured Client Testimonials
Barnes Wendling (especially Lena) did a great job with our financials. Everything. It is extremely refreshing and comforting to know that all of our numbers are not only correct, but they are in the right place(s). Your diligence and reporting truly does make me (personally) feel better.
Thomas Adomaitis - Controller, Bialosky Cleveland

Featured Client Testimonials
I can wholeheartedly tell you that I have yet to work with an audit or tax team that have been more helpful, easy to work with, and committed than the team at Barnes Wendling- I have been through three different firms in the last few years.
Michelle Saylor, Former Controller, Aero Mag

Featured Client Testimonials
Floyd Trouten at Barnes Wendling CPAs is an “expert’s expert” when it comes to M & A accounting. Not only does he understand the evolving details of the Tax Code but he also sees the fine points of their application for owners, managers, investors, and financiers.
Mark A. Filippell, Western Reserve Partners

Featured Client Testimonials
The service is amazing at Barnes Wendling CPAs. The benefit is worth more than the cost. Sometimes it’s true that you get what you pay for.
Mark Boucher - Former Owner, Castle Heating & Air

Featured Client Testimonials
Floyd and Barnes Wendling CPAs always provide us with peace of mind. Floyd is not only our trusted financial advisor, but we trust him like family. The Barnes Wendling CPAs team is always proactive and meet all of our deadlines. We are very grateful for them.
Trish Gleason, OMCO Holdings & Gleason Family Office

Featured Client Testimonials
Our heartfelt thanks to the Barnes Wendling CPAs team for all you do for us, such as your remarkable responsiveness, timeliness in meeting deadlines, and being such a pleasure to work with!
Karyn Davies Mitchell, CareMetx

Featured Client Testimonials
The quality of your staff on our audit was excellent. I couldn’t ask for a more knowledgeable team with end-result focus.
Brian Spitz, American Tank and Fabricating Company

Featured Client Testimonials
Barnes Wendling takes a holistic, comprehensive approach that helps ensure we are looking ahead to the future. By keeping us up to date on relevant law and regulation changes, we can focus on running our business rather than burying ourselves in tax law. All of this is well communicated, which is the key to any relationship.
Joe Gramc - CFO, Five Star Trucking

Featured Client Testimonials
The valuation team at Barnes Wendling CPAs has provided us with consistently excellent service over the last ten years. We have been impressed with their expertise on business valuations, fairness opinions, and Topic 805 engagements.
Ric Hughes - CFO, AKSM
Featured Post