To our Valued Clients,

The Executive Orders

On August 8, President Trump signed four executive orders to extend federal pandemic relief. These executive orders include:

• Payroll tax deferral of 6.2% of Social Security taxes on wages for employees who earn less than $100,000 per year from September 1 to December 31, 2020. Note: This is currently a deferral, not a tax credit. It is unclear whether the taxpayer (employee) or the employer will eventually be required to pay the full amount. 
• Federal unemployment benefits have been extended beyond the original July 31 expiration date but reduced to $400 per week for qualified persons through mid-December 2020. Note: The unemployment memorandum includes a contingency that the states contribute at least 25% ($100) of these funds. We don’t know yet when this will go into effect, whether it will be retroactive to August 1, or which states will participate.
• Federal student loan payment deferrals (including waivers of interest) have been extended through December 31, 2020.
• The Treasury and Housing and Urban Development departments have been asked to identify temporary financial assistance measures to help renters and homeowners avoid eviction or foreclosure. Note: This study does not extend the federal ban on evictions, which expired on July 31, 2020.

Employers and employed workers will be particularly interested in understanding how the payroll tax deferral will work. The intent is to put more money in workers’ pockets by increasing their take-home pay. At this point, it’s understood the taxes will be deferred to be paid at a later date. However, the order directs the Secretary of Treasury to explore ways to eliminate this tax obligation altogether.

Unemployed workers will be eager to know whether their state will participate in the extended unemployment program. Each state will need to confirm whether or not they can afford to participate. 

Legal challenges are expected, and implement guidelines have not been released.

We’re Here to Help

Have questions or need some help? Don’t hesitate to reach out to our experts. For more information on keeping your business running during disruption, visit our “Coronavirus Updates.”

 Best Regards,

Martin D. Williams, CPA,
Managing Partner
Machen McChesney, LLP