Placement: Consent Agenda
Action Requested: Motion / Vote
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Approve Opting Out of the Social Security Payroll Tax Obligation Deferral Option.
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Submitted By: Jeff Snyder, CFO, Financial Management Department
Strategic Plan Link: The City's Mission to be financially responsible.
Executive Summary (General Business): Per IRS Notice 2020-65 (Attachment B,) on August 8, 2020, the President of the United States directed the Secretary of Treasury to allow the deferral of the withholding, deposit, and payment of employees' social security tax contributions. This is a voluntary program to be decided upon by each employer.
Presentation Information: N/A
Staff Recommendation: Move that the Council approve opting out of the payroll tax obligation deferral.
Alternate Recommendations:
1. Move that the Council amend the recommendation and approve opting out of the payroll tax obligation deferral.
2. Move that the Council provide staff direction.
Background: The Secretary of the Treasury directed the possibility of deferring withholding, deposit, and payment of tax imposed by 26 U.S.C. 3101(a), and so much of the tax imposed by 26 U.S.C. 3201 as is attributable to the rate in effect under 26 U.S.C. 3101(a), on wages or compensation, as applicable, paid during the period of September 1, 2020 through December 31, 2020 subject to the conditions listed on Attachment A.
Issues/Analysis: Ultimately, the City (employer) would be responsible for repaying the employee's deferred contributions. The employee will owe the deferred tax, but it will be on the City to collect it. If the City is unable to collect the deferred tax, then the City becomes responsible to pay the amount owed by the employee.
Financial Information: This deferral would only be applied to wages paid between Sept 1, 2020 and December 31, 2020. Note that this deferral only applies to employees making less than $4,000 on a biweekly pay period; or $104,000 annually. This would result in a very ...
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