On August 8, 2020, the President of the United States issued a memorandum on deferring payroll tax obligations in light of the ongoing COVID-19 pandemic. The memorandum generally provided that employers could elect to defer payment of the employee’s portion of Social Security taxes (currently 6.2%) if certain requirements were satisfied. Specifically, the memorandum provided the FICA tax deferral applies to employee wages paid between September 1, 2020 and December 31, 2020 if the applicable employee’s wages are less than $4,000 biweekly (calculated on a pre-tax basis).
The U.S. Treasury and the IRS issued guidance confirming that FICA taxes deferred during the eligible period must be paid back between January 1, 2021 and April 30, 2021, and, therefore, any benefit to employees is negated by the requirement to pay back all taxes deferred.
The University will not be implementing the employee FICA tax deferral available under the Presidential memorandum.
By not electing to implement the deferral, Cornell will protect its employees from paychecks reductions resulting from an increased FICA tax deduction – the normal requested employment taxes and the deferred taxes from the previous deferral period – during January 1 through April 30, 2021.
If you have any questions, please contact University Payroll.