Employers are down to the wire to decide if they want to opt in to President Trump’s so-called payroll tax holiday, and tax experts note there’s a plethora of possible consequences to deferring the payroll taxes.
Back in early August, Trump issued a memorandum that would allow employers to defer the employee portion of the Social Security tax (that 6.2% per paycheck) for employees making less than $4,000 bi-weekly (or roughly $104,000 per year) from September 1 through December 31 this year. But guidance released by the IRS and Treasury on Friday, just days before the holiday would start taking effect, has many experts skeptical of the scheme.
While not explicitly stated in the guidance, experts believe it’s clear employers will be able to opt out of participating—and that most would indeed skew on the conservative side and do just that.
The upshot is that employees could temporarily see