A questioned relief in the Social Security contribution promoted by Donald Trump enters into force

Starting this month, employers in the United States and Puerto Rico may temporarily stop withholding the contribution that employees pay to the Social Security, as permitted by an executive order approved by the president Donald Trump.

This executive order seeks to provide relief to the pocket of employees in the midst of the coronavirus pandemic. However, there are doubts about the effectiveness of the alleged aid, which has led a score of American business organizations – including the United States Chamber of Commerce – to express themselves on the usefulness of said guideline.

When does the measure come into force and to whom does it apply?

The executive order states that The employee will be exempt from remitting their share of the social security payment starting today, September 1, until the end of the 2020 calendar year. However, the employer will be obliged to continue sending to the federal Social Security office, as usual, the portion of 6.2% that corresponds to him.said Kenneth Rivera, attorney and certified public accountant (CPA).

Rivera explained that the president wants to offer a grace period in which employees do not have to pay federal contributions, so that the payroll payment reaches them more bulky in this COVID-19 emergency.

However, because you cannot eliminate taxes unless there is a law that says so, you encourage members of Congress to make it law when they return to work the next week after Labor Day.

A moratorium, not an exemption

As the statute has not been approved for now, its what the executive order does is postpone the payment that the employee contributes to Social Security until 2021. Starting next January and for the following four months, the employee would have to catch up and pay the money he stopped sending to the federal agency.

The accountant and attorney opined that it is unlikely that employers will offer this option to defer payment, because it is unattractive. Also has an aggravating factor for the employer, and that is that it has to guarantee that tax withheld; that is, if the employee retires or resigns, the employer is obligated to cover said payment.

Rivera noted that in the language of the executive order it is not clear whether it is mandatory or optional. The expert is inclined to think that it is optional and that the decision will depend on whether or not the employer wants to make it available to his workforce.

Business sector reserves

As for the United States Chamber of Commerce and the business entities that have shown reservations with this presidential directive, they sent a letter to the Secretary of the Treasury, Steven Mnuchin and the leaders of both congressional bodies Nancy Pelosi and Mitch McConnell in which they urge the Trump administration and Congress to come together to provide much-needed tax relief for families, but “without the uncertainty associated with the recent executive order.”

The executive order “creates a substantial tax liability for employees at the end of the deferral period. Without an action by Congress to forgive this responsibility, it threatens to impose serious hardships on employees who will face a large tax bill as a result of the postponement.”Reads the letter from business entities sent on August 18.

“Many of our members will likely refuse to implement the deferral and will choose to continue withholding and remitting legally required payroll taxes to the government,” the letter states.

Meanwhile, Rivera indicated that he does not know if any employer has implemented said executive order in Puerto Rico.

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