Although President Donald Trump announced a plan to let companies temporarily defer payroll taxes for their workers, few companies are taking part, meaning many Americans won’t see an increase in their paychecks.
The IRS issued guidance last week stating that employers have responsibility for the tax deferral, and that although they could cease withholding workers’ payroll taxes if those employees earn less than $104,000 per year, those employees would still have to pay those taxes by the end of next April, and they could face up to 6.2% in past-due taxes before they pay the amount deferred this year.
Although Trump said that he plans to forgive those taxes, that would require an act of Congress, and Fox Business notes that the Democrat-controlled House is unlikely to cooperate.
“Given the numerous implementation challenges, remaining outstanding questions, and the extremely short implementation period, employers are likely to continue withholding and remitting payroll taxes to the Treasury,” Caroline Harris, U.S. Chamber of Commerce vice president of tax policy, told Fox Business on Thursday.
“I would say that practically all of the retailers that we’ve heard from on this issue have decided that they’re not going to implement the deferral, or their company hasn’t made a decision yet,” Rachelle Bernstein, National Retail Federation vice president, told Fox Business.
Bernstein added that many companies use third-party administrators for their payroll, and that these organizations don’t know how to change their software to calculate the deferral.
“What was shared with me was that the payroll administrators are saying that they have not yet figured out how to change their software to implement this rule,” she said. “If they can’t change it, the employers can’t do it … Whether you want to or not, you’re reliant on that.”
© 2022 Newsmax. All rights reserved.