The Town of Buena Vista will not be participating in the employee payroll tax deferral plan, which was announced last month by President Trump as an attempt to bring short-term relief to workers during the coronavirus pandemic.
Buena Vista joins multiple non-federal employers across the country who are saying no to the arrangement, claiming potential administrative headaches and uneven paychecks for employees. Barring any federal legislation that would forgive the tax break, employees would have to repay those taxes, meaning smaller than normal paychecks after the first of the year.
Under the plan, employers can opt to stop withholding the 6.2 percent employee-side Social Security tax through the end of the (202) year from workers making less than $4,000 biweekly. Employers would then recuperate the money by increasing the amount withheld from paychecks in the first few months of 2021.
Buena Vista Treasurer Michelle Stoke said carrying out the plan could be problematic. For example, what happens if an employee decides to leave after having taxes deferred, but before the taxes are repaid? At the Sept. 8 Board of Trustees meeting, she said “my head exploded” when she saw the news of the Social Security tax holiday.
While many employers are saying no to the plan, the federal government has made participation mandatory for its employees. In a statement Sunday, the Defense Finance Accounting Service said members of the military and civilian employees would not be able to opt out of the deferral if they made more than $4,000 per pay period or $104,000 annually. The plan takes effect for the pay period ending Sept. 12.
The Trump administration has said it would request legislation allowing employees to avoid paying back the money.
Meanwhile, lawmakers and federal employee unions have urged the administration to allow federal employees to choose whether to have their taxes deferred. They have also asked for more information about the workings of the plan, including how the money will be recouped.
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