Shutterstock.com

Payroll Tax Deferral Will Be Mandatory for Eligible Feds, Service Members

The Trump administration has ignored calls to allow federal employees to opt out of the planned deferral of Social Security taxes from lawmakers and federal employee groups.

Federal employees and members of the military will not be able to opt out of the Trump administration’s plan to defer payroll taxes from this month until the end of the year, despite calls from lawmakers and federal employee groups.

In August, President Trump issued a memorandum authorizing employers to defer payroll taxes between September and December 2020, and late last month, federal payroll providers announced they would begin implementing the deferral later this month.

That decision drew outcry from federal employee groups and Democratic lawmakers, who accused the administration of treating federal workers like “guinea pigs,” since many private employers have said they would not opt to take advantage of the initiative.

Opponents of the plan said the move would simply force federal employees to pay back taxes by April 2020 and set them up for penalties and interest payments if they cannot reimburse the Treasury in time. They asked the administration to allow feds to opt out of the deferral and continue to have their payroll taxes taken out of their paychecks as normal.

But in a statement Sunday, the Defense Finance and Accounting Service, which processes payroll for the Defense Department, said civilian employees and members of the military service branches would not be able to opt out of the deferral. According to the president’s memorandum, employees will have their taxes deferred if they make less than $4,000 per pay period or $104,000 annually.

“Effective pay period ending September 12, 2020, DFAS will temporarily defer your 6.2% [Old Age, Survivors and Disability Insurance] tax withholding if your wages . . . are $4,000 or less in any given pay period,” the agency wrote. “[Military] members [and civilian employees] are not eligible to opt out of the deferral if their Social Security wages fall within the stated limits. The deferral will happen automatically.”

It remains to be seen how federal agencies plan to recoup the deferred tax money in 2021, although the Trump administration has said it would request legislation allowing employees to avoid paying back the money.

“Per IRS guidance, collection of the deferred taxes will be taken from your wages between January 1 and April 30, 2021 for both military members and civilian employees,” the Defense payroll agency stated. “Additional information on that collection process will be provided in the future. If a military member or civilian employee separates or retires in 2020 before the Social Security tax can be collected in 2021, they are still responsible for the Social Security tax repayment.”

In a statement Tuesday, National Treasury Employees Union National President Tony Reardon described the rollout of the payroll tax deferral as “unconscionable.”

“[Federal workers] deserve to know the full impact of this deferral on their paychecks including whether the program has already begun and how these deferred taxes will be collected next year,” he said. “There is a distinct lack of transparency and disclosure on the financial implications. Since the administration continues to fail to fully inform the workforce, NTEU will alert the employees we represent that they need to be prepared to pay the deferred taxes next year.”

Randy Erwin, national president of the National Federation of Federal Employees, noted that if federal agencies simply recoup the taxes in the first few months of 2021, the temporary deferral effectively amounts to a 12% tax increase just on federal workers.

“Without consultation of Congress or stakeholder groups, and seemingly against the advice of the business community, the Trump administration orchestrates this stupid tax plan, which equates to a forced loan to federal workers based on their payroll taxes,” he said. “The Trump administration ruled out the ability to opt out of this bizarre tax scam, so employees have to set this money aside in order to repay it early next year via increased deductions from their paychecks. This change is pointless.”

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.