The IRS has told the Business Journal that it has no information or comment on President Trump’s executive order signed on Saturday that has been widely reported as suspending payroll taxes that are collected to support Social Security and Medicare.
In fact, the text of the order, titled “Memorandum for the Secretary of the Treasury,” makes clear that it does nothing to change an employer’s obligation to withhold taxes from the paychecks of employees and match the amounts withheld when the employer sends a deposit to the IRS.
How frequently the employer needs to make a deposit with the IRS depends on how much in withholding taxes and matching payments need to be remitted to the government. Some employers need to send in the funds semiweekly, others monthly and others quarterly.
While the spin of some politicians may have left the impression with some businesspeople that Trump’s signing of the Aug. 8 order immediately relieves them of the responsibility to file returns and remit money owed, that’s not what it does. It merely directs the Secretary of the Treasury, Steven Mnuchin, to issue guidance to institute a deferral of the withholding taxes applicable for the period Sept. 1 through Dec. 31, 2020. Further, it limits any deferral to taxes collected from the paychecks of employees who earn less than $4,000 in any biweekly pay period.
The executive order also tells Mnuchin to explore possible ways to eliminate the obligation to actually pay in the future any taxes that had been deferred.
Mnuchin’s office did not respond to several inquiries by the Business Journal seeking to determine when he might move ahead with the action called for in the executive order and whether and when business could actually go ahead with deferring the tax withholding. The order said specifically that it “is not intended to, and does not, create any right or benefit.”
While it states, in part, “This modest, targeted action will put money directly in the pockets of American workers and generate additional incentives for work and employment, right when the money is needed most,” it does not actually change any IRS regulations regarding withholding taxes.
