Executive Orders to Suspend Payroll Taxes, Expand Unemployment Benefits, and more

At A Glance

In order to provide additional relief to workers during the COVID pandemic, President Trump has issued executive orders to:

• Suspend Social Security Tax collections from employees;
• Expand unemployment benefits;
• Extend eviction protections; and
• Suspend student loan payments

Payroll Tax Deferral

In an memorandum to the Secretary of Treasury, President Trump orders the suspension the collection of Employee Social Security taxes effective September 1, 2020 until December 31, 2020 for individuals making less than $4000 on a bi-weekly basis.  Payroll tax deferrals are subject to the following conditions;

• The deferral may be made available with respect to any employee the amount of whose wages or compensation, as applicable, payable during any bi-weekly pay period generally is less than $4,000 (or the equivalent amount with respect to other pay periods), calculated on a pre-tax basis.
• Amounts deferred pursuant to the implementation of this memorandum may be deferred without any penalties, interest, additional amount, or addition to the tax.

It is important to note that these taxes will still be due at a future date determined by Treasury, but that Congress could choose to waive these payments. This would require legislative action; until that occurs, taxpayers should be prepared to remit these funds to IRS next year. The Order directs Treasury to issue guidance for implementing this change. We expect guidance within the coming weeks and will immediately update resources as well as system functionality to allow taxpayers to take advantage of this opportunity once details are available.

Expansion of Unemployment Benefits

The President also issued a memorandum to expand Unemployment Benefits. This spring, Congress passed the CARES Act, which created additional unemployment benefits in the amount of $600 per week. This benefit ran through July 31, 2020 and has since lapsed. Due to the continued need for additional unemployment assistance, the President has issued an order to extend unemployment benefits by $400 per week to eligible claimants from the week of unemployment ending August 1, 2020.

Eviction Protections

The CARES Act prevented landlords from evicting tenants or charging fees due to late payment of rent. These protections have lapsed, but an Executive Order signed on August 8 charges Treasury and Housing and Urban Development with taking any lawful actions to provide financial assistance to renters facing COVID-related economic hardships, and take any appropriate actions to prevent evictions due to such financial hardships.

Student Loan Payment Suspension

An additional memorandum suspends payments on federal student loan payments owned by the Department of Labor. Initial relief in this area was granted by the CARES Act, but that relief will expire on September 30. The order will extend payment suspension until December 31, 2020.

Next Steps

Our Government Relations team will continue to monitor these issues for additional guidance and will provide details as they are available.