On August 8, 2020, U.S. President Donald Trump signed a series of executive orders regarding the COVID-19 pandemic, which may impact certain employers: 

Deferral of certain payroll tax obligations for the period from September 1, 2020 through December 31, 2020: The order directs the Secretary of the Treasury to defer certain employee payroll taxes for bi-weekly wages that are generally less than $4,000.00 (under approximately $104,000.00 annually).

This order delays the 6.2% of wages that employers currently withhold from employee wages in every paycheck that is then paid to the federal government to fund Social Security. Employers would continue to pay another 6.2% per employee, as usual. While deferred payments would not accrue penalties or interest, these tax payments would be due at a later date, although the order directs the Secretary of the Treasury to explore avenues to cancel the tax debt and to issue guidance to implement the order.

Extension of unemployment aid: The $600 weekly federal payment that augmented state unemployment assistance ended July 31, 2020, without any Congressional action to replace it. 

President Trump’s order calls for weekly supplemental unemployment assistance of $400, but requires states to contribute $100 of that amount. The order extends aid through December 6, 2020 or until funding runs out. It is estimated that the additional aid would run out before October if unemployment continues at current levels.

The order raises questions of presidential power as Congress has the power of spending. 

Further, the issue of a state’s ability to make the $100 per week payment was raised on August 10, 2020, when California Governor Gavin Newsom said that “massive” budget cuts would result if California provided $100 of the $400 supplemental unemployment benefit required under the executive order, and called for federal officials to provide additional funding for states now that the $600 per week federal unemployment benefit has expired.

Consideration of residential eviction halt and aid for residential mortgage & rent payments: The President’s order directs the Health and Human Services Secretary and the Centers for Disease Control and Prevention Director to consider whether any measures halting residential evictions for failure to pay rent are “reasonably necessary to prevent the spread of COVID-19…” Further, the Secretary of the Treasury and Secretary of Housing and Urban Development are directed to “identify any and all available Federal funds to provide temporary financial assistance to renters and homeowners who, as a result of the financial hardships caused by COVID-19, are struggling to meet their monthly rental or mortgage obligations.”

Continuation of student loan payment deferral until December 31, 2020: The Presidential order extends the deferral of student loan payments on student loans held by the Department of Education until December 31, 2020. The order also continues the waiver of all interest. Principal payments that are deferred would be due in full after December 31, 2020, and the requirement to make full payments including interest would resume on January 1, 2021.

The author would like to gratefully acknowledge the assistance of Joanne Warriner.

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