GAO clears way for Democrats to try to overturn Trump's payroll tax deferral

GAO clears way for Democrats to try to overturn Trump's payroll tax deferral
© Greg Nash

The Government Accountability Office (GAO) on Tuesday cleared the way for Democrats to try to overturn IRS guidance implementing President TrumpDonald John TrumpVenezuela judge orders prison time for 6 American oil executives Trump says he'll leave White House if Biden declared winner of Electoral College The Memo: Biden faces tough road on pledge to heal nation MORE's payroll tax deferral order.

In a letter Tuesday to Senate Minority Leader Charles SchumerChuck SchumerUS national security policy in the 117th Congress and a new administration Voters say Biden should make coronavirus vaccine a priority: poll New York City subway service could be slashed 40 percent, officials warn MORE (D-N.Y.) and Senate Finance Committee ranking member Ron WydenRonald (Ron) Lee WydenTwo more parting shots from Trump aimed squarely at disabled workers On The Money: Push for student loan forgiveness puts Biden in tight spot | Trump is wild card as shutdown fears grow | Mnuchin asks Fed to return 5 billion in unspent COVID emergency funds Grassley, Wyden criticize Treasury guidance concerning PPP loans MORE (D-Ore.), GAO General Counsel Thomas Armstrong said the office considers the IRS guidance to be a rule for purposes of the Congressional Review Act (CRA).

The finding that the guidance is a rule under the CRA allows Senate Democrats to force a vote on a resolution to disapprove of the IRS notice. CRA resolutions can get a Senate floor vote with signatures from 30 senators.


Rep. John Larson John Barry LarsonIt's time for a grand agreement on Social Security What we need to do next to defeat COVID and unify the country Anxious Democrats amp up pressure for vote on COVID-19 aid MORE (D-Conn.), the chairman of a House subcommittee on Social Security, has already introduced a CRA resolution to overturn the guidance in the House.

Under the IRS guidance, released late last month, employers can choose to stop withholding employee-side Social Security payroll taxes through the end of the year for workers making under $4,000 biweekly. Employers will then need to recoup the deferred taxes by increasing the amount withheld from workers' paychecks in the first few months of 2021.

Democrats have strongly criticized Trump's payroll tax deferral, arguing that it will hurt workers who end up with smaller paychecks next year. Schumer and Wyden said earlier this month that they wanted a GAO determination on whether the IRS guidance was a rule for CRA purposes in order to "move forward with the CRA process and ultimately protect lower and middle-income Americans’ hard-earned wages and retirees’ Social Security benefits from Trump's plan." 

Armstrong said the GAO considers the guidance to be a rule because the IRS submitted its guidance to the office under the CRA. 

While the GAO letter allows Democrats to proceed with their effort to overturn the payroll tax deferral guidance, the effort is unlikely to succeed. A resolution to overturn the guidance needs a majority to pass the Senate, and a majority of senators are Republicans. Additionally, Trump would likely veto a resolution to overturn the guidance.


Wyden said in a statement Tuesday that he appreciated the GAO's letter.

"Senator Schumer and I will look at next steps,” he said.

Updated at 7:34 p.m.