Deferring Payment of Employer Social Security and Self-Employment Taxes More Generous Than Thought

April 13, 2020

In an effort to encourage continued employment and reduce EMPLOYER tax payments in these cash strapped times, the CARES Act allows for the deferral of Employer Payroll Taxes (i.e. employer's share of Social Security Taxes) and Self-Employment ("SE") taxes otherwise due between March 27th and December 31st 2020 without  interest or penalty.  Fifty percent of the deferred amount is payable December 31, 2021 and the remaining fifty percent is due December 31, 2022.  

Under the CARES Act, employers and/or Self-employed taxpayers that receive a Paycheck Protection Program ("PPP") loan may not defer the deposit and payment of the employer's share of social security tax.  However, IRS guidance issued April 10th clarifies that even if the Employer is applying for or has received a PPP loan, all employment taxes otherwise payable can be deferred until such time that the employer or self-employed taxpayer is notified that their PPP loan has been forgiven.

PPP borrowers can choose any eight-week period from February 15, 2020 to June 30, 2020 to quantify the amount of loan forgiveness. It would seem that the earliest that the loan would be forgiven would be after June 30th.  At minimum they can defer all employer payroll and self-employed taxes for the next three months with 50% payable December 31, 2021 and the remaining 50% payable December 31, 2022.

Please do not hesitate to contact with any questions or concerns. www.pwcpa.com 212 605 3100

Perelson Weiner LLP Certified Public Accountants
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