As all Americans and, in particular, small business owners continue to understand the evolving CARES Act, the IRS released clarifications regarding the terms of payroll tax deferrals within the Paycheck Protection Program (PPP).
It was previously believed that taxpayers who were taking a covered loan under the PPP/CARES Act were not eligible for deferral of the social security tax. However, on April 15, 2020, the IRS clarified that you can, in fact, defer the employer portion (6.2%) of the payroll tax until the loan is actually forgiven.
The IRS fact sheet states the following:
If you have any questions about this or anything else, please feel free to reach out to us to discuss.
To read more about the clarifications, visit: https://www.irs.gov/newsroom/deferral-of-employment-tax-deposits-and-payments-through-december-31-2020
This post was first published April 16, 2020 and was updated July 29, 2020.