The U.S. Treasury Department released guidance (pdf) Friday evening informing companies and workers how Trumps proposed tax holiday will apply to them.
Companies can stop withholding employees payroll taxes starting Sept. 1, although workers will have to pay the taxes by the end of April 2021. The new guidance, released together with the IRS, applies only to those whose bi-weekly paychecks are less than $4,000, the equivalent of $104,000 a year.
The guidance comes after President Donald Trumps August 8 executive action giving workers a tax holiday. It left open the possibility of forgiving the deferred tax later on.
But only Congress has the power to waive taxes, so all the president can do is postpone when they are due.
Although Trumps action was signed weeks earlier, the guidance was delayed as the White House looked into whether it was possible to waive workers taxes entirely rather than deferring them to next year. The answer from the Internal Revenue Service was no, employees are still on the hook for paying their taxes next year.
It is up to the companies whether they will opt in to the payroll tax deferral. Many were waiting for the guidance from the Treasury Department, but already a collection of business leaders have pushed back against the plan.
“Many of our members consider it unfair to employees to make a decision that would force a big tax bill on them next year,” the U.S. Chamber of Commerce and more than 30 trade associations wrote in an August 18 letter to Congress and the TreasuRead More From Source