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Tax Planning and Preparation

GUIDANCE RELATING TO THE PAYROLL TAX DEFERRAL

On Friday, August 28, 2020, the IRS issued Notice 2020-65 to provide guidance relating to the Presidential Memorandum issued on August 8th which instructed the Secretary of the Treasury to defer the withholding, deposit and payment of certain payroll taxes.  The Notice allows employers to defer withholding on affected employees' compensation during the last four months of 2020 and then withhold those deferred amounts during the first four months of 2021.  Please note that under this notice, the Employer may postpone the collection of the 6.2% Social Security tax on  'Applicable Wages' of employees (defined as employees whose wages are less that $4,000 paid bi-weekly), but this notice does not eliminate the tax.  The Employer is responsible for collecting the amount of tax deferred under this arrangement in 2021 and remitting it to the IRS, even if the employee is terminated or leaves the company before the repayment period is over.

Due to the risk that this arrangement places on the employer should an affected employee leave before or during the repayment period, as well as the hardship that will be placed on the employees when they are required to pay the increased tax in 2021, we are recommending that employers continue to withhold and pay the tax as usual.  This will likely result in an overpayment on the quarterly Form 941, which can be applied to the next quarter's return until it is absorbed during the repayment period.  If additional legislation is passed which forgives this portion of payroll tax, the overpayment can be refunded to the employer and then refunded to the individual employees accordingly.

We realize that there is a fair amount of confusion over this payroll tax deferral, so please contact us with any questions.  At this point, we do not know how the various payroll providers plan to address this in their software, so please reach out to us if help is needed.  We recommend that you communicate your plan with regards to this notice to your employees.

INDIVIDUAL AND BUSINESS INCOME PLANNING AND TAX PREPARATION SERVICES

At Askey, Askey & Associates, CPA, LLC, we guide our clients through a full range of tax planning and preparation decisions with strategies that minimize your tax liabilities, maximize your cash flow and keep you on track to your financial goals. Our expertise, experience, analysis and thorough research allow us to optimize financial opportunities to be found in existing as well as recently altered tax laws. We are knowledgeable and up to date on the tax laws and can make sense of your receipts, bills and notices.

ESTATE AND TRUST PLANNING AND TAX PREPARATION SERVICES

Effective estate and trust planning can ensure financial security for loved ones. For businesses, it can maintain a smooth succession of ownership. Askey, Askey & Associates, CPA, LLC's role is to help you navigate the complex and shifting tax laws to facilitate the transfer of assets and minimize the tax liability of your beneficiaries. Everyone should have a well-thought-out plan as to how to distribute the assets left in one's estate so as to avoid complications and to be sure that the individual’s wishes are followed. Having your taxes and estate thoroughly and carefully planned will ensure that your loved ones don't have any complications to deal with during a time of loss.

IRS REPRESENTATION

Professional representation can be vital during an audit, and our experience with tax authorities enables us to guide clients in their dealings with federal and state agencies. If you have been chosen for an audit, the professional representation you can find with our firm can put many of your worries at bay. We are ready and willing to answer any and all questions the IRS may be asking of you.