The IRS has issued a list of Frequently Asked Questions (FAQ’s) related to the payroll tax deferral opportunity that is provided by the Coronavirus Aid, Relief and Economic Security Act (CARES Act). This opportunity allows employers of any size to defer the deposit and payment of the employer’s share of Social Security Taxes. This includes tax exempt, non-profit employers, as well. It also allows self-employed individuals to defer payment of some self-employment taxes.
Clarification for Employers Participating in the Payroll Protection Program (PPP)
There has been some confusion over whether employers who obtained a Paycheck Protection Program loan could use the tax deferral since there is wording in the CARES Act that states employers who obtain PPP loans may not defer deposit of payroll taxes. The FAQ’s have clarified that employers who have obtained PPP loans are allowed to defer deposit of payroll taxes until the employer receives a final decision from its lender that all or a portion of their PPP loan is forgiven. An employer may not defer the deposit and payment of its share of the Social Security tax due on or after the date the employer receives notice that their loan has been forgiven and must resume their timely payroll tax deposits once loan forgiveness has occurred.
To see a full list of the IRS FAQ’s, click HERE.
Posted August 2020 – Copyright 2020
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