IRS Says Firms On the Hook
The IRS issued long-awaited Guidance on President Donald Trump’s Payroll Tax Deferral Friday evening.
The ruling allows deferral of taxes but does nothing to eliminate employer liability.
- Employers and employees share responsibility for a 12.4% levy that funds Social Security and a 2.9% tax to support Medicare.
- Trump's executive order applies specifically to the Social Security tax and would affect workers whose bi-weekly pay is less than $4,000 on a pretax basis.
- The three-page notice the IRS issued on Friday postpones the due date for these taxes until April 30, 2021. After that date, penalties, interest and “additions to tax” will begin to accrue.
- Employers – dubbed the “affected taxpayers” in the guidance – “may make arrangements to otherwise collect the total applicable taxes from the employee,” the IRS said in its guidance on Friday.
Just Say No?
“To me, this says you’re telling the employer not to withhold the money, put themselves on the hook and then make ‘some arrangement’ to get the money back – or trust us that we’ll go and forgive it for you,” said Adam Markowitz, enrolled agent at Howard L Markowitz PA CPA in Leesburg, Florida.
“I had warned my employer clients that this would be a ‘hard no,’” he said.
“What if the employer hangs onto the taxes in a bank account and the employee leaves? What do we do with the money?” asked Dan Herron, CPA and principal of Elemental Wealth Advisors in San Luis Obispo, California.
“Do we give the money to the employee and tell them to figure it out how to report it on their Form 1040?” he asked. “It’s a compliance nightmare.”
This is what happens when presidents issue seat-of-the-pants executive orders while ignoring the temporary nature of them.
Seat-of-the-Pants Executive Orders
Trump says if elected he will make the changes permanent.
That's another blatant Trump lie. He has no power or privilege to do so and he knows it too.
If Trump had that power, he would do it now rather than lie about doing so later.
Devastating Fiscal Cliff
Meanwhile, a Devastating Consumer Financial Cliff is Underway.
Over 27 million people missed 5 weekly checks of $600 each. Here's the math: 27 million * 5 * $600 = $81 billion dollars. That is money consumers don't have to pay the rent, pay mortgages, or but food.
Trump offered $1.3 trillion. Pelosi asked for $3 trillion but would settle for $2 trillion.
Who Gets the Blame?
Both Republicans and Democrats are making an election gamble with close to 30 million people severely impacted.
My guess is Trump gets more of the blame. The party in power generally takes more of the brunt.
Trump is so far down in the polls he needs a big gamble to win.
But to be fair, both parties seem willing to ruin lives if it increases their chances of winning.