Home Health & Hospice Week

President Trump’s Aug. 8 executive order deferring certain payroll taxes may not help employees — or employers.

“I am directing the Secretary of the Treasury to use his authority to defer certain payroll tax obligations with respect to the American workers most in need,” President Trump said in the order at www.whitehouse.gov/presidential-actions/memorandum-deferring-payroll-tax-obligations-light-ongoing-covid-19-disaster.

The order would apply from “September 1, 2020, through December 31, 2020” and to workers who are paid less than $4,000 biweekly, it specifies. Deferred amounts would not be subject to any penalties or interest, and the order urges Treasury to “explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred.”

Reminder: Payroll tax is a 6.2 percent tax on an em­ployee’s salary that is withheld from their paycheck to fund Social Security, and the employer pays another 6.2 percent. The CARES Act gave businesses the option to defer their share of this year’s payroll taxes, which publicly traded home care chains have said they are doing. This executive order instructs the Treasury Department to defer collection of the employee-side payroll tax payment.

But the order hangs a heavy tax burden on employees next year, protest 30 trade groups such as the U.S. Chamber of Commerce and the National Association of REALTORS in an Aug. 18 letter to Senate Majority Leader Mitch McConnell, House Speaker Nancy Pelosi, and Treasury Secretary Steve Mnuchin. “If this were a suspension of the payroll tax so that employees were not forced to pay it back later, implementation would be less challenging,” the letter says. “But under a simple deferral … many of our members consider it unfair to employees to make a decision that would force a big tax bill on them next year.”