The US Internal Revenue Service (IRS) has provided further clarification on deferring employment tax deposits, under rules introduced in the CARES Act to address the economic impact of the COVID-19 pandemic. The guidance is in the form of frequently asked questions (FAQs).
The CARES Act permits deferral of payroll tax for the period beginning on 27 March 2020 and ending on 31 December 2020. The FAQs note that deposits can be deferred by reducing required deposits or payments for the relevant period, less credits against the employer's share of social security tax. The new guidance also explains how to report deferrals, how deferral works for employers that file annual employment tax returns, timing issues, the interaction with the "next-day deposit" rule, deferral by third-party payers, and certain other technical aspects.