IRS Confirms Payroll Tax Deferral Is Optional

On September 3, 2020, as reported in Bloomberg Tax, the IRS confirmed advice we’ve been providing clients regarding President Trump’s payroll tax deferral announcement. The IRS confirmed that:

1. The deferral is optional, not mandatory; and
2. The employer, not the employee, controls the decision of whether to defer the employee portion of Social Security tax.

The IRS still has not addressed the issue of how to collect the tax from employees whose employment ends after the deferral but before the employer has a chance to collect the tax from them. Since the employer remains liable for such deferred tax, we are hesitant to recommend any deferral.