By Richard Rubin
Some of the nation's largest employers -- including CVS Health
Corp., Wells Fargo & Co. and the U.S. Postal Service -- say
they won't implement President Trump's payroll-tax deferral plan,
opting to leave employee paychecks alone this fall.
The president's plan lets employers stop withholding the 6.2%
Social Security tax now for most workers and requires them to pay
it back early next year through additional paycheck withholding.
Mr. Trump wants Congress to forgive those deferred taxes, but
without any assurance of that happening, the plan continues to find
little footing in the private sector as companies make their
decisions.
"We have reviewed the guidance issued by the U.S. Treasury
Department and the IRS and have determined that participating in
this optional deferral program is not in our employees' best
interest," said Michael DeAngelis, a spokesman for CVS Health.
Other large employers, including United Parcel Service Inc.,
JPMorgan Chase & Co., and Home Depot Inc., say they aren't
participating either. Wells Fargo wanted "to avoid creating a
future financial burden for employees," said spokesman Peter
Gilchrist.
That lack of interest from companies -- some of which employ
hundreds of thousands of potentially eligible workers -- limits the
broader economic impact of the deferral. For now, the largest group
of affected workers is the one controlled by Mr. Trump -- federal
executive-branch employees and military-service members who will
see their paychecks grow this month and then shrink in January.
Mr. Trump announced the payroll-tax deferral in August, offering
it as his way of getting money to households during the
pandemic-induced economic downturn amid a stalemate in Congress
over further assistance. He used a law that lets the administration
postpone tax deadlines after a disaster.
The deferral is available through Dec. 31 for workers making
under $104,000 on an annualized basis. Someone making $80,000 a
year could push as much as $1,653 in the employee's share of
payroll taxes from this year's paychecks into next year's.
Mr. Trump's approach delayed the taxes but didn't eliminate them
because only Congress can do that. He has urged Congress to forgive
deferred taxes and to approve a transfer that would keep the Social
Security trust fund whole.
"When we win I, as your President, will totally forgive ALL
deferred payroll taxes with money from the General Fund," he said
on Twitter on Thursday.
So far, however, lawmakers have shown little appetite to approve
the forgiveness, and Democrats are trying to overturn the executive
action. And the fewer affected employees there are, the less
pressure Congress will feel.
Dozens of large employers, ranging from private-sector companies
to state governments, have yet to say whether they will participate
in the deferral program.
The Internal Revenue Service says employers who defer taxes now
must collect them with double withholding in early 2021. If
necessary, they can make other arrangements with workers to get the
money.
Employers get to decide whether to participate, and many just
aren't interested.
The change can be hard to explain to employees and the benefits
can be small because of the need to pay the money back next year.
If workers leave their jobs before the tax is recouped, the
employer can be stuck with the tax liability.
Some small businesses and Trump-aligned employers seem the most
likely to participate.
The Republican National Committee is offering the deferral to
its employees, said spokesman Michael Ahrens.
Rep. Kevin Brady (R., Texas), the top Republican on the House
Ways and Means Committee, said Thursday that he is deferring the
taxes for his campaign staff and is exploring options for his
congressional staff. But the House's chief administrative officer
said in a memo Friday that it wouldn't be implementing the
deferral.
Mr. Brady is introducing a bill to forgive the deferred
taxes.
"It would be a shame if employers, large and small, don't help
their workers with this deferral," he said.
Still, some states run by Republican governors may not implement
the deferral for their own workers. Oklahoma won't do it, said
Baylee Lakey, spokeswoman for Oklahoma Gov. Kevin Stitt. Other
states with Republican governors, including Maryland and Georgia,
haven't made decisions yet and neither has Democratic-run New
York.
Payroll providers are changing their software so employers can
implement the deferral. In some cases, employers may offer workers
an option about whether to defer the taxes.
Federal workers and military-service members aren't getting that
choice. In a Sept. 4 internal memo, IRS human-resources executives
said many employees had asked whether they could opt out.
"We have had many discussions with Treasury and they have
confirmed that no eligible IRS employees can opt out," they
wrote.
With no option available, Sergeant Major of the Army Michael
Grinston, the top enlisted official, has urged soldiers to set the
extra money aside when it starts arriving in paychecks.
Write to Richard Rubin at richard.rubin@wsj.com
(END) Dow Jones Newswires
September 11, 2020 12:16 ET (16:16 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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