Payroll Tax Deferral Decision: Q&A With Amy King


The federal government recently offered a deferral of payroll taxes on wages paid from Sept. 1 through Dec. 31, 2020. North Georgia Conference considered this option and has decided not to pursue the deferral. As local churches consider whether to pursue this deferral, we checked in with Benefits Officer Amy King to learn more:

Q: Is there a benefit or risk to employees?
Amy King: We do not see a benefit to employees because this is just a deferral and not a forgiveness of the tax. If this were tax forgiveness, I could see implementing it. However, it temporarily inflates the employee's pay for four months and then decreases their pay for four months beginning in January.  Due to the take-home pay decreasing at the beginning of the year, when employees are likely recovering from holiday shopping, this could possibly hurt the employees in the future more than it would help them now. 

Q: Is there a benefit or risk from an Accounting Perspective?
Amy King: There is a great deal of paperwork for the employer who accepts this deferral, requiring advanced accounting knowledge. Penalties, interest, and additions to tax will be assessed if the taxes aren't all paid back by the end of April. There is currently no guidance on whether the penalties, interest, and addition to tax will be levied against the employee, the employer, or both. There is also currently no guidance as to what to do if an employee were to leave employment before the tax is paid back. 

Q: What is the North Georgia Conference's conclusion? 
Amy King: The risk and reward aspect of this tax measure do not balance out. There is little benefit to warrant the possibility of burdening employees and employers. In consultation with the Conference Board of Pension and Health Benefits, the Conference has chosen to not participate in the payroll tax deferral program.