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MemoMemorandumTrump 45 · R

Presidential Memorandum

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

This memorandum directs the Treasury Secretary to defer payroll tax withholding for workers earning under roughly $104,000 annually (less than $4,000 per bi-weekly pay period) from September 1 through December 31, 2020, due to COVID-19 economic disruption. The deferral applies to the employee portion of Social Security taxes (26 U.S.C. 3101(a)), with no penalties or interest, and instructs Treasury to explore avenues including legislation to forgive the deferred taxes permanently.

Federal Register Open PDF 85 FR 49587

Impact dates

  1. Treasury Secretary to explore avenues for tax forgiveness

  2. Treasury Secretary to issue implementing guidance

  3. Deferral period ends

  4. Deferral period begins

Key directives

  • Defer withholding, deposit, and payment of 26 U.S.C. 3101(a) taxes on wages paid September 1, 2020 through December 31, 2020
  • Limit deferral to employees with bi-weekly wages under $4,000 (pre-tax) or equivalent
  • Defer without penalties, interest, or additions to tax
  • Treasury Secretary shall issue guidance to implement
  • Treasury Secretary shall explore avenues including legislation to eliminate obligation to pay deferred taxes

Who is ordered

Timeline

Immediate

  • Deferral takes effect September 1, 2020 for eligible workers

Near term (90d)

  • Treasury must issue implementing guidance
  • Deferral period runs through December 31, 2020

Long term

  • Deferred taxes theoretically due unless Congress acts to forgive them
  • Potential fiscal impact if forgiveness pursued

Risks & tensions

  • Deferred taxes remain legally owed unless Congress acts—creating potential future liability for workers
  • Employers face uncertainty about whether to withhold (risking double collection later) or stop withholding (risking inability to recoup if forgiveness fails)
  • Authority under 26 U.S.C. 7508A typically postpones deadlines rather than eliminates tax obligations, making permanent forgiveness legally questionable without legislation
  • Vague 'explore avenues' language in Section 4 creates no binding obligation and no clear mechanism
  • Political tension: framed as relief but functions as loan to workers unless Congress cooperates
Presidential Memorandum: Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster · Executive Orders