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Many Companies Defer Their Own Share of Payroll Taxes Without Deferring Their Employees' Share

Ruth Singleton
Published Date:
Sep 15, 2020
While most U.S. employers have opted not to implement the employee payroll tax deferral that was part of a presidential executive order, many are deferring their own share of payroll taxes, according to Politico.
As part of the CARES Act, Congress allowed employers to defer payment of their share of the Social Security tax (half of the 12.4 percent total) for the rest of 2020 and to pay back half of the deferred amount at the end of 2021 and the other half at the end of 2022.
Politico reports that although these employer provisions aren't as well known to the public as the employee deferral, tens of thousands of companies are taking advantage of them, including Chipotle Mexican Grill, UPS, American Airlines, Wendy’s, AMC Entertainment, SeaWorld and Chico’s. According to Politico, ADP, the payroll processing company, says that more than 40,000 of its clients are now taking advantage of the employer deferral.
Politico quoted Pete Isberg, vice president of government affairs at ADP, who said, “It makes good sense from the large employers’ perspective. Do they want to pay millions of dollars now? Or put that money to use—maybe invest it or whatever they do with their money?” He added, “It’s an interest-free loan from the IRS.” Isberg observed that it’s relatively simple for employers to postpone their own payroll taxes, but not as simple to defer their employees' payroll taxes.

Several major trade associations, including the U.S. Chamber of Commerce and the National Retail Federation, warned that employers wouldn’t participate in the employee payroll tax deferral. Politico noted that few employers other than the federal government have implemented it, and the House of Representatives recently announced that it would not participate.

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