On Saturday, President Trump ordered a broad but not universal deferral of payroll collections.

Under the temporary suspension, the Treasury Department will defer the withholding, deposit, and payment of payroll taxes on certain earnings [just under $100,000 in annual income], paid from September 1, 2020 through the end of the year. The order instructs that the following conditions apply:

• The deferral shall be made available with respect to any employee the amount of whose wages or compensation, as applicable, payable during any bi-weekly pay period generally is less than $4,000, calculated on a pre-tax basis, or the equivalent amount with respect to other pay periods.
• Amounts deferred pursuant to the implementation of this memorandum shall be deferred without any penalties, interest, additional amount, or addition to the tax.

The president also directed Treasury Secretary Steve Mnuchin to "explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum."

In remarks yesterday, the president said the failure to reach a deal with Congress on another coronavirus relief package compelled action. He said: "...I will act, under my authority as president, to get Americans the relief they need. And what we’re talking about is deferring the payroll tax for a period of months until the end of the year.... At the end of the year, it may be extended."

The full text of the president's order on payroll taxes is posted here.

The president issued three other unilateral directives yesterday on extending unemployment benefits, suspending evictions and foreclosures, and extending student loan payment relief:

• Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster Declarations Related to Coronavirus Disease 2019
• Executive Order on Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners
• Memorandum on Continued Student Loan Payment Relief During the COVID-19 Pandemic

The following is the text of the president’s directive on payroll taxes:

MEMORANDUM FOR THE SECRETARY OF THE TREASURY

SUBJECT:  Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1. Policy.  The 2019 novel coronavirus (COVID-19) that originated in the People’s Republic of China has caused significant, sudden, and unexpected disruptions to the American economy.  On March 13, 2020, I determined that the COVID-19 pandemic is of sufficient severity and magnitude to warrant an emergency declaration under section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5207, and that is still the case today.  American workers have been particularly hard hit by this ongoing disaster.  While the Department of the Treasury has already undertaken historic efforts to alleviate the hardships of our citizens, it is clear that further temporary relief is necessary to support working Americans during these challenging times.  To that end, today I am directing the Secretary of the Treasury to use his authority to defer certain payroll tax obligations with respect to the American workers most in need.  This modest, targeted action will put money directly in the pockets of American workers and generate additional incentives for work and employment, right when the money is needed most.

Sec. 2. Deferring Certain Payroll Tax Obligations  The Secretary of the Treasury is hereby directed to use his authority pursuant to 26 U.S.C. 7508A to defer the withholding, deposit, and payment of the tax imposed by 26 U.S.C. 3101(a), and so much of the tax imposed by 26 U.S.C. 3201 as is attributable to the rate in effect under 26 U.S.C. 3101(a), on wages or compensation, as applicable, paid during the period of September 1, 2020, through December 31, 2020, subject to the following conditions:

• (a)  The deferral shall be made available with respect to any employee the amount of whose wages or compensation, as applicable, payable during any bi-weekly pay period generally is less than $4,000, calculated on a pre-tax basis, or the equivalent amount with respect to other pay periods.
• (b)  Amounts deferred pursuant to the implementation of this memorandum shall be deferred without any penalties, interest, additional amount, or addition to the tax.

Sec. 3. Authorizing Guidance. The Secretary of the Treasury shall issue guidance to implement this memorandum.

Sec. 4. Tax Forgiveness. The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.

Sec. 5. General Provisions.

• (a)  Nothing in this memorandum shall be construed to impair or otherwise affect:
  • (i) the authority granted by law to an executive department or agency, or the head thereof; or
  • (ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
• (b)  This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
• (c)  This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
• (d)  You are authorized and directed to publish this memorandum in the Federal Register.

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