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US Chamber asks Treasury to clear up 'serious concerns' about payroll tax deferral
The U.S. Chamber of Commerce on Wednesday asked the Treasury Department to answer "significant questions" raised by President Trump's executive order allowing a deferral of payroll taxes.
In a Wednesday letter to Treasury Secretary Steven Mnuchin, the largest lobbying group for U.S. businesses asked the department to clear up uncertainty about how Trump's order could be implemented by firms, their employees and payroll processors.
"While the recently issued Executive Order (EO) on payroll tax deferral is well-intended to provide relief, it has raised serious concerns for both employers and employees," wrote Caroline Harris, the Chamber's vice president of tax policy and economic development.
Trump this week signed an order directing the Treasury Department to defer payment of Social Security payroll taxes collected from employee paychecks through the end of the year for those making under roughly $100,000. The start date for the planned deferral period is listed as Sept. 1.
Trump and some right-leaning economists have touted a payroll tax deferral as an effective way to stimulate the economy by giving workers more take-home pay. The president had repeatedly sought to include a payroll tax deferral in past and pending coronavirus relief bills but had been blocked by opposition from both Democratic and Republican lawmakers.
While Trump's executive order may be a backdoor way of securing the payroll tax deferral, the lack of clear guidance as to how it would be implemented, who would be responsible for doing so and what would happen to deferred payments has raised major concerns among lawmakers and tax policy experts. The order also raises a slew of questions about how to handle bonuses, the pay of seasonal workers and employees who leave before the deferral period, Harris wrote.
"The uncertainty raised by these issues, as well as myriad other issues not enumerated here, only exacerbates the challenges faced by payroll processors and compliance departments who are already struggling to implement this EO in an extremely short period of time," she wrote.
Harris also cited concerns about the "substantial tax liability for employees at the end of the deferral period" that "threatens to impose serious hardships on employees who will face a large tax bill at the end of the deferral period."