The IRS has posted guidance, if you can call it that, on the payroll tax deferral scheme.

It purports to say that employers can stop withholding Social Sec. tax from Sept-Dec...but then they have to withhold double from January-April.

Wut is the point?

https://www.irs.gov/pub/irs-drop/n-20-65.pdf

A key issue is what happens if an employee is no longer with the same employer then. How can the employer withhold the tax then?

The guidance simply tells employers ("Affected Taxpayers") that they "may make arrangements."

Arrangements?

It's clear from this guidance that there's no opt-in for employees. And they're still liable for the tax.

So if an employer participates (a big if) then employees would have either 2x withholding next year or, perhaps if they don't stay with the same firm, a surprise tax bill.

It's really, really hard to see why employers would choose to participate in this mess, except if they have some political reason to do so. All it does is create risk, hassle, and uncertainty for them.

It shouldn't be forgotten that these taxes fund Social Security. And this pointless stunt creates more risk that Social Security taxes won't be collected - for example if an employer doesn't withhold, then goes out of business or absconds.

The reason the law requires withholding *when* wages are paid is to ensure that Social Security (and Medicare) taxes are collected.

One of the things this guidance is doesn’t answer is how employers should recoup tax next year from the many workers with irregular hours and pay, or those who get raises or pay cuts, or who are laid off. It’s not as simple as withholding 2x next year.

And if an employer can’t recoup the tax from employees, the employer can’t cleanly resolve the situation by just paying the tax. Because *that tax payment* would be considered income to the employee, subject to income+Medicare+SS taxes.

Good luck employers!

By the way, the myriad problems with this guidance are not the fault of the Treasury/IRS lawyers who wrote it. The problem is that the Trumpsters tried to go around Congress and you just can't on something like this.