Relief Act Payroll Tax Deferral

For taxpayer businesses who do not avail themselves of the forgivable loans under the SBA 7(a) Small Business Interruption Loan Program, there is a plan to defer a portion of the payroll taxes which would otherwise be due.  The amount of the payroll tax deferral would be ½ of the OASDI amount (currently ½ of the OASDI is 6.2%) otherwise payable during 2020.  For some businesses, especially ones which do not qualify for the Small Business Interruption Loan Program, or which would be restricted by the overall limitation of $1,000,000, the payroll tax deferral option may provide a better cash flow option for the business, even though none of it is forgivable like the SBA business interruption loan program.

The period that payroll taxes could be deferred would begin now and extend through the end of 2020.  Then, 50% of those payroll taxes deferred would be due by December 31, 2021, and the other half would be due by December 31, 2022.

The employee portion of the payroll taxes (the half of the OASDI withheld from the employees’ checks) would still be due at the normal dates as before.