MSCI Tells Congress To Act On Payroll Tax Deferral
On August 18, the Metals Service Center Institute, along with the National Association of Manufacturers, the U.S. Chamber of Commerce, and more than two dozen other trade associations, sent a letter to U.S. Treasury Secretary Steve Mnuchin, U.S. Senate Majority Leader Mitch McConnell (R-Ky.), and U.S. House Speaker Nancy Pelosi (D-Calif.) asking that they provide clarity on President Donald Trump’s recent executive orders allowing for the temporary deferral of the employee’s portion of the payroll tax. (Click here for more information from Connecting the Dots about that order.)
The letter warned that, without congressional action, the executive order would saddle workers with a major tax bill at the end of the deferral period, which is over December 31, 2020. An individual earning $35,000, for example, would owe more than $750 in taxes at the end of the payroll tax deferral period. An employee who earned $104,000 annually would face a bill of more than $2,200.
The letter argued, “If this were a suspension of the payroll tax so that employees were not forced to pay it back later, implementation would be less challenging. But under a simple deferral, employees would be stuck with a large tax bill in 2021. Many of our members consider it unfair to employees to make a decision that would force a big tax bill on them next year. It would also be unworkable to implement a system where employees make this decision.”
The letter also raised manufacturers’ concerns regarding the administrative challenges associated with the payroll tax deferral. Click here to read the full letter.
The Internal Revenue Service is expected to issue guidance on the president’s executive order soon. Stay tuned to Connecting the Dots for more information.