September 3, 2020 – Payroll tax holiday? Too good to be true?

You may have heard or seen in the news about the executive order regarding a “payroll tax holiday” beginning on September 1.  The IRS recently issued Notice 2020-65 which provides some additional guidance, but still leaves some questions unanswered.    However, it is important to understand that the tax liability is “deferred,” not forgiven. While the Executive branch can defer a tax, only Congress can forgive it.

That means that employees that choose to apply for the executive action will be required to pay the deferred liability in full at the end of the deferral period in early 2021. And that responsibility falls on the employer.  Employers would then either have to withhold double in early 2021 or pay the deferred taxes from their own funds if the employees are no longer with the organization.

On August 12, 2020, Secretary Mnuchin affirmed that participation was optional, stating “We can’t force people [employers] to participate….”

Therefore, in my opinion, I strongly recommend that my clients do not implement this payroll tax deferral and continue to process payroll as usual. 

As I receive additional guidance about what documentation is necessary to “opt out”, I will keep you informed. 

In the meantime, if you have any questions, please feel free to contact me at or 317.706.1040.