On Aug 8, 2020, President Trump signed a memorandum directing the Treasury to provide specific relief with reference to the social security withholding. For the purposes of the notice, all employers required to withhold and pay social security withholding are affected by COVID 19 and would be considered “Affected Taxpayers”. For affected taxpayers, the withholding and payment of the tax imposed are postponed until the period beginning Jan 01, 2021, and ending Apr 30, 2021.
For the purposes of the notice applicable wages are defines as compensation or defined benefit paid to an employee on any pay date beginning Sep 01, 2020, and ending December 31, 2020. However, this is limited to wages less than $4,000 for any bi-weekly pay period or the equivalent amount for other pay periods. The determination of applicable wages is to be made on a pay period by pay period basis. If for a particular pay period the wages are below the threshold indicated, the relief is to be allowed, irrespective of wages paid to that employee in other pay periods.
The affected taxpayer must then withhold and pay applicable taxes that were deferred, rateably from compensation paid between Jan 01, 2021, and April 30, 2021. In the event that this is not paid, interest, penalties and additional tax will begin to accrue from May 01, 2021.
The above measure provides considerable additional relief to employers especially small businesses and also provides some much-needed disposable income to individual taxpayers in these trying times.