April 14, 2020 | Read Time: 1 Minute
Employer Payroll Tax Deferral: Under CARES Act section 2302, an employer may defer the employer portion of Social Security taxes due between March 27 and December 31, 2020, provided at least 50% of the deferred taxes are paid by the end of 2021 and the remainder is paid by the end of 2022. However, employers that have their indebtedness forgiven under the Paycheck Protection Program are not eligible to defer these taxes.
It is unclear from the statutory language precisely how this provision will work – specifically, whether the employer is no longer eligible for loan forgiveness if it defers, whether the employer would have to deposit any deferred payroll taxes to be eligible for loan forgiveness, or whether the employer could simply no longer defer payroll taxes after it receives loan forgiveness. Again, we are anticipating regulatory guidance, which hopefully will clarify this issue.
Accordingly, until such guidance is issued, we believe the safest course of action for employers that want to seek forgiveness of any PPP loans is to not defer payroll taxes.
Huberty accountants and the COVID-19 Planning team are working every day to help business owners and individuals understand the considerations regarding the latest COVID-19 policies and related Acts. Ask about our COVID-19 Service package to assure you are maximizing your assistance and assuring information needed for forgiveness.