On August 8, 2020, President Donald Trump signed an executive order deferring payroll tax obligations for workers earning less than $100,000 a year.
The ‘Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster’ states that ‘The Secretary of the Treasury is now directed to use his authority under 26 U.S.C. 7508A to defer the withholding, deposit, and payment of the tax imposed by 26 U.S.C. 3101(a), and so much of the tax imposed by 26 U.S.C. 3201 as is attributable to the rate in effect under 26 U.S.C. 3101(a), on wages or compensation, as applicable, paid during the period of September 1, 2020, through December 31, 2020.’ ) The deferral shall be made available concerning any employee the amount of whose wages or compensation, as applicable, payable during any bi-weekly pay period generally is less than $4,000, calculated on a pre-tax basis, or the equivalent amount for other pay periods, it stated.
Trump signed the directive that waives payroll tax that funds Social Security after partisan disagreements on Capitol Hill kept lawmakers from agreeing on another coronavirus stimulus package, reported The Washington Post. Under the new order, workers can defer their tax bills — but it does not forgive the taxes outright. Section 4 of the Presidential Memorandum says, ‘The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred according to the implementation of this memorandum.’ Trump has been pushing the idea for a while, but found scant support in Congress.
The executive order says the cut comes into effect on September 1, but a Reuters report quoted Trump as saying that it ‘most likely’ would be retroactive to August 1 and translate into ‘bigger paychecks for working families.’