Are you an employer who wonders if you should offer the payroll tax holiday to your employees, or are you curious about how that tax would be repaid? Basically, the law states that payroll taxes can be deferred from September through December 2020. And recently, the IRS has stated that the payroll taxes would need to be repaid by April 2021.

The question becomes, “What happens if the employee leaves and you are not able to collect from the employee the amount of tax that’s been deferred?” From what I read in a recent article, it states that the employer would be responsible for repaying that payroll tax. So, if you’re unsure of if you want to go ahead and offer that, just be aware that the liability would fall on you to have that repaid if the employee leaves their employment before the end of the year, or if you don’t have the chance to recollect the full amount of tax that would be due before April 2021.

It’s my recommendation that if employees do not have the capability to put that money away that’s being deferred to be able to pay it back in early 2021 that they not have it withheld. With deferred rent, additional taxes that could be due in April for their 2020 taxes, especially if they were claiming unemployment and they weren’t aware that this is also taxable, it could be a huge burden for them to have to repay the amount by April 2021. So again, the decision is up to you if you want to offer it. I want you to just be aware that the liability could fall on you if your employees don’t have the capability of paying that back by April 2020.

If you have any questions, you can reach us at contact@abandp.com. That’s contact@abandp.com, (310) 534-5577, and our website www.abandp.com. I hope you found this helpful and you have a great day.

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