Noting that a recent memorandum from President Trump mandating the U.S. Department of Treasury defer the collection and payment of employee payroll taxes has caused confusion and concern among accountants and businesses, the AICPA has submitted a letter to Treasury and the IRS requesting additional guidance and clarification and providing specific recommendations.
Among the requests specifically outlined in the letter is guidance related to:
- The deferral being voluntary and noting that an “eligible employee” is responsible for making an affirmative election to defer the payroll taxes.
- An “eligible employee” being an employee whose wages are less than $4,000 per bi-weekly pay period.
- The $4,000 limit applying separately to each employer of an employee.
- A payment due date(s) for the deferred taxes and a mechanism for employees to pay the deferred taxes.
“Since the taxes being discussed are those ‘imposed on the income of each employee,’ a big question we have is whether or not employees will have the option to opt in or out of the program,” says Edward Karl, AICPA VP of taxation. “Employees should make the deferral decision and should also be responsible for repayment, however, there are certain questions that need to be considered that taxpayers and businesses need guidance on. Employers still have to figure out how to implement this policy, but right now, there are too many unknowns.”