Sage is monitoring President Trump’s Executive Order deferring employee social security tax obligations in light of COVID-19 (effective September 1, 2020)

On Saturday, August 8, 2020, President Trump signed an Executive Order which directs Treasury Secretary Mnuchin to defer withholding, deposit, and payment of the tax imposed by 26 U.S.C. §3101(a), and 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. To read the full order, click here.

The AICPA has requested guidance from the Treasury Department and the IRS on the payroll tax deferral, and Sage is monitoring this closely. To learn more about the guidance request, click here.

We are waiting on guidance and clarifications from the Treasury Department and the IRS before determining our next steps.

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  • Gina - it looks like the IRS has issued something late Friday.  The Journal of Accountancy published an article putting it in plain speak.   Looking forward to guidance on how to process in Sage 100.

    https://www.irs.gov/pub/irs-drop/n-20-65.pdf

    https://www.journalofaccountancy.com/news/2020/aug/irs-payroll-tax-deferral-guidance.html

     

  • UPDATE as of 9/11/2020:

    We are currently working on programming for this to be included in Sage 100 Payroll 2.20.3, which is currently scheduled to be released by the end of September.

     

    If you are offering your employee's this payroll tax deferral before our fix is released, we recommend doing the following:

    1. Enter payroll as usual and then run tax calculation
    2. Print out the Payroll Data Entry Audit Report (This is to have audit trail showing the employee’s Social Security tax amount they are choosing to defer).
    3. You will then need to go back into Payroll Data Entry and for each applicable employee do the following:
      1. On the Header tab, select the Manual Taxes checkbox
      2. Click Taxes button
      3. Zero out the amount in the Soc Sec Tax field (Note: this is the tax amount that will be deferred).
    4. Run Tax Calculation again
    5. Proceed as usual

     

    • Until we release our enhancement for this, we suggest creating a spreadsheet or some way to keep track of each employee’s deferred social security tax. Then after you have installed Sage 100 Payroll 2.20.3, you will be able to manually enter each employee’s year-to-date Social Security Tax Deferred amount in Sage 100.

    NOTE: The IRS emphasized the employee social security tax deferral postponement is optional and while nothing bars an employer from considering employee input, the employer remains the "Affected Taxpayer" and is not required to use the relief even upon an employee's request.