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Article | Executive Pay Memo North America

Yes, the Social Security payroll tax holiday is optional

Governance Advisory Services |Executive Compensation
COVID 19 Coronavirus

By Gary Chase and Steve Seelig | September 11, 2020

IRS representative clarified that employers have the option of whether to implement the Social Security payroll tax holiday

As discussed in our previous article, Notice 2020-65 provided some needed guidance for employers on how to implement the Social Security payroll tax holiday (SS tax holiday) provided under President Trump’s Presidential Memorandum, Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster.

Although it was broadly believed that employers had discretion whether to implement the SS tax holiday, the notice did not specifically address this issue. On September 3, the IRS provided the desired clarity during its monthly payroll industry teleconference. An IRS representative confirmed both that the SS tax holiday is optional and that an employer (and not the employee) has the choice of whether to implement the SS tax holiday. These clarifications are welcome news, particularly since early indications are that many employers are not moving forward with implementing the SS tax holiday.

Authors

Director, Retirement and Executive Compensation

Senior Director, Executive Compensation (Arlington)

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