J. Kent's Blog - Articles for Employers and Job Seekers

UPDATE: Further Clarification on the Payroll Tax Deferral Executive Order of Aug. 8, 2020

Posted by: Karen Booher on September 20th, 2020

On Aug. 28, 2020, the IRS issued further guidance on the deferral of certain employee payroll taxes from President Trump’s Aug. 8, 2020 Executive Order (EO). IRS Notice 2020-65 clarifies certain items, but the EO is still subject to change and many questions remain unanswered.

Under the EO, summarized in our August blog, employees earning less than $4,000 bi-weekly are eligible to defer their payment of the Social Security tax portion of FICA, which is 6.2% of their gross wages. Payroll tax deferrals can begin Sep. 1, 2020 and continue through Dec. 31, 2020. Employees electing to do so would take home a larger paycheck during this time.

The caveat though is that the deferred taxes would need to be paid in 2021. So, although it might alleviate some financial burden for your employees in 2020, it could cause financial challenges for them in 2021 when the deferred taxes need to be paid in addition to their current payroll taxes.

Some Items of Clarification from IRS Notice 2020-65 (but Still Subject to Change):

What Are Still Some of the Unknowns?

The employer may make arrangements to otherwise collect the total applicable taxes from the employee. However, it appears that in both situations notated above, the employer will be obligated to pay the deferred taxes to the government.

This article does not represent legal advice. Employers who choose to offer this tax deferral to its employees should seek the advice of legal counsel.


  1. September 19, 2020, Volume X, Number 264, The National Law Review. “IRS Issues Guidance on Deferral of Certain Employee Payroll Taxes”, September 3, 2020.
  2. August 28, 2020, IRS Notice 2020-65