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Important Heads-Up for Employers About the Payroll Tax Deferral Executive Order

Posted by: Karen Booher on August 19th, 2020

On August 8, 2020, President Trump issued an Executive Order relating in part to a payroll tax deferral for employees. This Executive Order aims to help relieve some of the immediate financial impacts of the COVID-19 pandemic by allowing employees to take home more money. In essence, the Payroll Tax Deferral is an interest-free loan for workers.

Highlights of the Executive Order

What Does This Mean for Employers?

Plain and simple, it means more work in the weeks and months ahead!

Employers will bear the responsibility for educating their employees about their payroll tax deferral option and for ensuring their payroll systems process and account for the deferral properly. And, for those employees who elect to defer their tax payments, it will mean more tracking and reporting requirements on behalf of their employer.

It’s important to know that employers are still responsible for the employer portion of the Social Security tax, whether the employee defers their portion or not.

Executive Orders – Things to Understand

Stay Tuned for Further Clarification of Many Unknowns

There are many questions that this Executive Order raises for both employers and employees. In fact, the unknowns outnumber the knowns at this point. But the Treasury Department is expected to provide further guidance in the weeks ahead and clarifications should be forthcoming on many items, including:

This blog does not constitute formal legal advice. It is recommended to always consult with your team of legal, tax, and accounting experts for professional guidance.


  1. Greenshades Software webinar, Payroll Tax Deferral, presented by Molly Van Kampen, CPP, Chief Evangelist, 18 August 2020.
  2. Staffing Industry Analysts Daily News, “Payroll Tax Suspension Raises Questions for Employers (NPR)“, 13 August 2020.
  3. PayNortheast, SHRM Member Network Digest, “Payroll Tax Holiday – What The Payroll Tax Holiday Means For You“, 9 August 2020.

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