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K-State Today

September 29, 2020

Presidential executive memorandum on deferring payroll tax obligations

Submitted by Human Capital Services

Last month, a presidential executive memorandum and additional guidance from the Internal Revenue Service provided the option for employers to implement a payroll tax deferral of 6.2% from September through December 2020 for employee paychecks under a specific threshold. For employees, the tax deferral program would only delay, not forgive, the responsibility for those taxes. Employees would be responsible for paying back the deferred taxes, essentially doubling the tax withholding from employee paychecks issued between January and April 2021, reducing employee take-home pay during that time. 

Kansas State University works closely with the state of Kansas regarding payroll practices and payroll information. The state has evaluated the IRS guidance and considered the impact on both paychecks and budgets of hard-working employees. Affected employees would be required to balance the short-term increase provided by the deferral with the future reduction of net pay during the collection period. Kansas State University and the state would also be responsible for ensuring proper collection of the tax liability by acting to recover the outstanding taxes of any employee who separates from state employment before the deferred taxes were collected. 

After careful consideration of the factors associated with the payroll tax deferral process, Kansas State University, along with the state of Kansas, has determined that it will not implement the payroll tax deferral program for its employees.