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Following an August 8 executive memorandum from President Donald Trump directing the deferral of employee payroll taxes, IRS Notice 2020-65 states that employers are able to defer the withholding and payment of the employee share of social security taxes beginning September 1 through December 31, 2020. The deferral only applies to employees whose compensation for a biweekly pay period is less than $4,000 (or the equivalent amount with respect to other pay periods).

The notice states that employers are responsible for withholding and payment of any deferred taxes, which will need to be withheld and repaid from wages and compensation earned between January 1 and April 30, 2021. Beginning in May, interest and penalties will begin to accrue on any unpaid amounts of previously deferred taxes.

Treasury Secretary Steve Mnuchin has publicly stated that the deferral of payroll taxes is optional for employers; however, the guidance is silent on employers’ ability to opt out of the deferral. Mnuchin also noted that Congress would need to enact legislation for the underlying tax liability to be waived for employees deferring taxes.

The guidance does not address how employers should treat the deferred taxes of employees that later leave, nor does it state whether employees can opt of the program.

The deferral measure raises serious practical hurdles and has come under criticism and skepticism from legal experts, economists, and business groups, including the U.S. Chamber of Commerce, which earlier this month characterized the measure as unworkable.

NACUBO urges colleges and universities to consider the serious questions regarding the statutory and regulatory authority for this action, as well as the many unaddressed specifics related to its implementation and potential legal and employee relations issues that could arise from its implementation.


Mary Bachinger

Director, Tax Policy



Megan Schneider

Senior Director, Government Affairs


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