Tax deferral plan steams ahead

Shutterstock ID 792858589 by Andrey_Popov 

The Trump administration isn't backing off a plan to stop withholding Social Security tax from the paychecks of federal employees earning less than $104,000 annually for the rest of calendar year 2020.

The plan, part of a broader administration effort to encourage companies to withhold payroll tax collection on a voluntary basis to inject more cash into the reeling U.S. economy, has drawn criticism from federal employee unions and lawmakers because of the potential tax crunch facing feds in 2021 when the deferred tax bill comes due.

Under a White House executive order, the tax deferral period kicked off Sept. 1. Many federal employees will see the changes beginning with pay periods that started last week. According to reporting in the Wall Street Journal, Bloomberg and elsewhere, few large public companies are opting to participate in the tax deferral scheme.

Mike Rigas, the acting deputy director for management at the Office of Management and Budget and the acting director of the Office of Personnel Management, issued a memo on Sept. 11 advising each agency to "coordinate with its payroll provider to disseminate information to employees, and to answer questions they may have."

Rigas also said that President Donald Trump and the administration are lobbying Congress to make the tax deferral permanent, so that federal employees aren't on the hook for the 6.2% of earnings that are normally withheld from paychecks to cover Social Security.

Rep. Kevin Brady (R-Texas) introduced a bill last Friday to designate a temporary payroll tax holiday so that feds and others participating in the deferral program won't have the pay back the taxes. Many members of Congress, mostly Democrats, have urged the Trump administration to make the tax deferral optional for federal employees and the uniformed military.

The Defense Department reminded service members and civilian employees last week that under the plan, deferred taxes will be collected in 2021.

Employees of the House of Representatives won't be participating in the tax deferral. Philip Kiko, the chief administrative officer of the House, told employees in a "dear colleague" letter that "implementing the deferral would not be in the best interests of the House or our employees."

About the Author

Adam Mazmanian is executive editor of FCW.

Before joining the editing team, Mazmanian was an FCW staff writer covering Congress, government-wide technology policy and the Department of Veterans Affairs. Prior to joining FCW, Mazmanian was technology correspondent for National Journal and served in a variety of editorial roles at B2B news service SmartBrief. Mazmanian has contributed reviews and articles to the Washington Post, the Washington City Paper, Newsday, New York Press, Architect Magazine and other publications.

Click here for previous articles by Mazmanian. Connect with him on Twitter at @thisismaz.


  • Defense
    Soldiers from the Old Guard test the second iteration of the Integrated Visual Augmentation System (IVAS) capability set during an exercise at Fort Belvoir, VA in Fall 2019. Photo by Courtney Bacon

    IVAS and the future of defense acquisition

    The Army’s Integrated Visual Augmentation System has been in the works for years, but the potentially multibillion deal could mark a paradigm shift in how the Defense Department buys and leverages technology.

  • Cybersecurity
    Deputy Secretary of Homeland Security Alejandro Mayorkas  (U.S. Coast Guard photo by Petty Officer 3rd Class Lora Ratliff)

    Mayorkas announces cyber 'sprints' on ransomware, ICS, workforce

    The Homeland Security secretary announced a series of focused efforts to address issues around ransomware, critical infrastructure and the agency's workforce that will all be launched in the coming weeks.

Stay Connected